EXECUTION COPY
EXHIBIT 10.15
SALE AND SERVICING AGREEMENT
Dated as of December 1, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LOAN TRUST 1998-A
(Trust)
and
FIRST NATIONAL BANK OF NEW ENGLAND
(Seller and Servicer)
FNBNE Business Loan Notes, Series 1998-A
TABLE OF CONTENTS
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Section Page
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ARTICLE I
DEFINITIONS
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Section 1.01 Definitions........................................................................... 2
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Section 1.02 Use of Words and Phrases.............................................................. 2
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Section 1.03 Captions; Table of Contents........................................................... 2
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ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
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Section 2.01 Sale and Conveyance of Trust Fund............................................... 3
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Section 2.02 Possession of Business Files.................................................... 3
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Section 2.03 Books and Records............................................................... 3
Section 2.04 Delivery of Business Loan Documents............................................. 3
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Section 2.05 Acceptance by Trustee of the Trust Fund; Certain Substitutions; Certification by
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Indenture Trustee............................................................... 6
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Section 2.06 [Reserved]...................................................................... 7
Section 2.07 [Reserved]...................................................................... 7
Section 2.08 Fees and Expenses of the Owner Trustee and the Indenture Trustee................ 7
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Section 2.09 Transfer and Conveyance of the Subsequent Business Loans........................ 8
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Section 2.10 Optional Repurchase of Defaulted Business Loans................................. 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Seller................................................... 11
Section 3.02 Individual Business Loans....................................................... 14
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Section 3.03 Purchase and Substitution of Defective Loans.................................... 18
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(i)
ARTICLE IV
ADMINISTRATION AND SERVICING OF BUSINESS LOANS
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Section 4.01 Duties of the Servicer.......................................................... 21
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Section 4.02 Liquidation of Business Loans................................................... 24
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Section 4.03 Establishment of Principal and Interest Accounts; Deposits in Principal and
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Interest Accounts............................................................... 25
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Section 4.04 Permitted Withdrawals From the Applicable Principal and Interest Account........ 26
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Section 4.05 [Intentionally Omitted]......................................................... 27
Section 4.06 Transfer of Accounts............................................................ 28
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Section 4.07 Maintenance of Hazard Insurance................................................. 28
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Section 4.08 [Intentionally Omitted]......................................................... 28
Section 4.09 Fidelity Bond................................................................... 28
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Section 4.10 Title, Management and Disposition of Foreclosed Property........................ 29
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Section 4.11 [Intentionally Omitted]......................................................... 29
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Section 4.12 Collection of Certain Business Loan Payments.................................... 29
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Section 4.13 Access to Certain Documentation and............................................. 30
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ARTICLE V
PAYMENTS TO THE CERTIFICATEHOLDERS
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Section 5.01 Establishment of Note Distribution Account; Deposits in Note Distribution
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Account; Permitted Withdrawals from Note Distribution Account.................. 31
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Section 5.02 Establishment of Spread Account; Deposits in Spread Account; Permitted
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Withdrawals from Spread Account................................................. 32
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Section 5.03 Establishment of Expense Account; Deposits in Expense Account; Permitted
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Withdrawals from Expense Account................................................ 33
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Section 5.04 Pre-Funding Account and Capitalized Interest Account............................ 35
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Section 5.05 [Intentionally Omitted]......................................................... 36
Section 5.06 Investment of Accounts.......................................................... 36
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Section 5.07 Distributions................................................................... 37
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Section 5.08 [Intentionally Omitted]......................................................... 39
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Section 5.09 Statements...................................................................... 39
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Section 5.10 Advances by the Servicer........................................................ 42
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Section 5.11 Compensating Interest........................................................... 42
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Section 5.12 Reports of Foreclosure and Abandonment.......................................... 43
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(ii)
ARTICLE VI
GENERAL SERVICING PROCEDURE
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Section 6.01 [Omitted]........................................................................ 44
Section 6.02 Satisfaction of Mortgages and Collateral and Release of Business Files........... 44
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Section 6.03 Servicing Compensation........................................................... 45
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Section 6.04 Annual Statement as to Compliance................................................ 45
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Section 6.05 Annual Independent Public........................................................ 46
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Section 6.06 Trustee's Right to Examine Servicer Records and Audit Operations................. 46
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Section 6.07 Reports to the Trustee; Principal and Interest Account Statements................ 46
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ARTICLE VII
REPORTS TO BE PROVIDED BY SERVICER
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Section 7.01 Financial Statements............................................................. 47
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ARTICLE VIII
THE SERVICER
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Section 8.01 Indemnification; Third Party Claims.............................................. 48
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Section 8.02 Merger or Consolidation of the Servicer.......................................... 49
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Section 8.03 Limitation on Liability of the Servicer and Others............................... 49
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Section 8.04 Servicer Not to Resign........................................................... 49
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ARTICLE IX
DEFAULT
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Section 9.01 Events of Default................................................................ 51
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Section 9.02 Trustee to Act; Appointment of Successor......................................... 52
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Section 9.03 Waiver of Defaults............................................................... 54
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Section 9.04. Control by Majority Noteholders.................................................. 54
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ARTICLE X
TERMINATION
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Section 10.01 Termination...................................................................... 56
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(iii)
Section 10.02 Accounting Upon Termination of Servicer.......................................... 57
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ARTICLE XI
MISCELLANEOUS PROVISIONS
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Section 11.01 Acts of Noteholders.............................................................. 58
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Section 11.02 Amendment........................................................................ 58
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Section 11.03 Recordation of Agreement......................................................... 58
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Section 11.04 Duration of Agreement............................................................ 59
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Section 11.05 Governing Law.................................................................... 59
Section 11.06 Notices.......................................................................... 59
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Section 11.07 Severability of Provisions....................................................... 59
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Section 11.08 No Partnership................................................................... 60
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Section 11.09 Counterparts..................................................................... 60
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Section 11.10 Successors and Assigns........................................................... 60
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Section 11.11 Headings......................................................................... 60
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Section 11.12 Notification to Rating Agencies.................................................. 60
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Section 11.13. Limitation of Liability.......................................................... 60
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(iv)
APPENDIX A Definitions and Usage
EXHIBIT INDEX
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EXHIBIT A Contents of Business File
EXHIBIT B [Intentionally Omitted]
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D [Intentionally Omitted]
EXHIBIT E [Intentionally Omitted]
EXHIBIT F Initial Certification
EXHIBIT F-1 Interim Certification
EXHIBIT F-2 Final Certification
EXHIBIT G [Intentionally Omitted]
EXHIBIT H Business Loan Schedule
EXHIBIT I Request for Release of Documents
EXHIBIT J Form of Liquidation Report
EXHIBIT K Form of Delinquency Report
EXHIBIT L Servicer's Monthly Computer Tape Format
(v)
Sale and Servicing Agreement dated as of December 1, 1998, between
FNBNE Business Loan Trust 1998-A (the "Trust"), and First National Bank of New
England, as Seller (the "Seller") and as Servicer (the "Servicer").
PRELIMINARY STATEMENT
The Trust was formed for the purpose of issuing asset backed notes and
asset backed certificates secured by the Business Loans. The Issuer has entered
into a trust indenture, dated as of December 1, 1998 (the "Indenture"), between
the Trust and the Indenture Trustee, pursuant to which the Trust intends to
issue its FNBNE Business Loan Notes, Series 1998-A, Adjustable Rate Class A,
Adjustable Rate Class M-1, Adjustable Rate Class M-2 and Adjustable Rate Class B
in the aggregate initial principal amounts of $55,250,000, $3,250,000,
$3,250,000, and $3,250,000, respectively (collectively, the "Notes"). Pursuant
to the Indenture, as security for the indebtedness represented by the Notes, the
Issuer is and will be pledging to the Indenture Trustee, or granting the
Indenture Trustee a security interest in, among other things, certain Business
Loans and Subsequent Business Loans and its rights under this Agreement.
The parties desire to enter into this Agreement to provide, among
other things, for the servicing of the Business Loans by the Servicer. The
Servicer acknowledges that, in order further to secure the Notes, the Trust is
and will be granting to the Indenture Trustee a security interest in, among
other things, its rights under this Agreement, and the Servicer agrees that all
covenants and agreements made by the Servicer herein with respect to the
Business Loans shall also be for the benefit and security of the Indenture
Trustee and Holders of the Notes. For its services hereunder, the Servicer will
receive a Servicing Fee (as defined herein) with respect to each Business Loan
serviced hereunder.
ARTICLE I
DEFINITIONS
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Section 1.01 Definitions. For all purposes of this Agreement, capitalized
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terms used herein shall have the meanings set forth in Appendix A, unless the
context clearly indicates otherwise.
Section 1.02 Use of Words and Phrases. "Herein", "hereby", "hereunder",
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"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used.
Section 1.03 Captions; Table of Contents. The captions or headings in
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this Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
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ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
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Section 2.01 Sale and Conveyance of Trust Fund.
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The Seller hereby sells, transfers, assigns, sets over and conveys to
the Trust without recourse, subject to the terms of this Agreement, all of the
right, title and interest of the Seller in and to the Initial Business Loans and
all other assets included or to be included in the Trust Fund in exchange for
the Notes and the Certificates.
Section 2.02 Possession of Business Files.
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(a) Upon the issuance of the Notes and Certificates, the ownership of
each Business Note, the Mortgage, if applicable, and the contents of the related
Business File relating to the Initial Business Loans is, and upon each
Subsequent Transfer Date the ownership of each Business Note, the Mortgage, if
applicable, and the contents of the related Business File relating to the
applicable Subsequent Business Loans will be, vested in the Trust for the
benefit of the Noteholders and Certificateholders, as the case may be.
(b) Pursuant to Section 2.04, with respect to the Initial Business
Loans the Seller has delivered or caused to be delivered, and, on each
Subsequent Transfer Date, the Seller will deliver or cause to be delivered, each
Business File to the Indenture Trustee.
Section 2.03 Books and Records.
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The transfer of each Business Loan shall be reflected on the Seller's
balance sheet and other financial statements and for tax purposes as a sale of
assets by the Seller and the Seller shall respond to any third-party inquiry
that such transfer is so reflected as a sale. The Seller shall be responsible
for maintaining, and shall maintain, a complete set of books and records for
each Business Loan which shall be clearly marked to reflect the ownership of
each Business Loan by the Trust for the benefit of the Noteholders and
Certificateholders.
Section 2.04 Delivery of Business Loan Documents.
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The Seller, (i) contemporaneously with the delivery of this Agreement,
has delivered or caused to be delivered to the Indenture Trustee and (ii) on
each Subsequent Transfer Date, will deliver or cause to be delivered to the
Indenture Trustee, each of the following documents:
(a) For each Initial Business Loan or Subsequent Business Loan,
as the case may be:
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(1) The original Business Note, endorsed by means of an allonge as
follows: "Pay to the order of Marine Midland Bank, and its successors and
assigns, as indenture trustee under that certain Indenture dated as of December
1, 1998 relating to FNBNE Business Loan Trust, 1998-A, without recourse" and
signed, by facsimile or manual signature, in the name of the Seller by a
Responsible Officer, with all prior and intervening endorsements showing a
complete chain of endorsement from the originator to the Seller, if the Seller
was not the originator;
(2) Blanket assignment of all Collateral securing the Business Loan,
including without limitation, all rights under applicable guarantees and
insurance policies;
(3) Irrevocable power of attorney of the Seller to the Indenture
Trustee to execute, deliver, file or record and otherwise deal with the
Collateral for the Business Loans in accordance with this Agreement. The power
of attorney will be delegable by the Indenture Trustee to the Servicer and any
successor servicer and will permit the Indenture Trustee or its delegate to
prepare, execute and file or record UCC financing statements and notices to
insurers; and
(4) Blanket UCC-1 financing statements identifying by type all
Collateral for the Business Loans and naming the Indenture Trustee, as assignee
of the Trust, as Secured Party and the Seller as the Debtor. The UCC-1
financing statements will be filed promptly following the Closing Date in
Connecticut and will be in the nature of protective notice filings rather than
true financing statements.
(b) For each Initial Business Loan or Subsequent Business Loan
secured by Commercial Property or Residential Property, as the case may be:
(1) Either: (i) the original Mortgage, with evidence of recording
thereon, (ii) a copy of the Mortgage certified as a true copy by a Responsible
Officer of the Seller where the original has been transmitted for recording
until such time as the original is returned by the public recording office or
duly licensed title or escrow officer or (iii) a copy of the Mortgage certified
by the public recording office in those instances where the original recorded
Mortgage has been lost;
(2) Either: (i) the original Assignment of Mortgage from the Seller
endorsed as follows: "Marine Midland Bank ("Assignee"), its successors and
assigns, as indenture trustee under the Indenture dated as of December 1, 1998
relating to FNBNE Business Loan Trust 1998-A" with evidence of recording thereon
(provided, however, that where permitted under the laws of the jurisdiction
wherein the Mortgaged Property is located, the Assignment of Mortgage may be
effected by one or more blanket assignments for Business Loans secured by
Mortgaged Properties located in the same county), or (ii) a copy of such
Assignment of Mortgage certified as a true copy by a Responsible Officer of the
Seller where the original has been transmitted for recording (provided, however,
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that where the original Assignment of Mortgage is not being delivered to the
Indenture Trustee, the Responsible Officer may complete one or more blanket
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certificates attaching copies of one or more Assignments of Mortgage relating to
the Mortgages originated by the Seller);
(3) Either: (i) originals of all intervening assignments, if any,
showing a complete chain of title from the originator to the Seller, including
warehousing assignments, with evidence of recording thereon if such assignments
were recorded, (ii) copies of any assignments certified as true copies by a
Responsible Officer of the Seller where the originals have been submitted for
recording until such time as the originals are returned by the public recording
officer, or (iii) copies of any assignments certified by the public recording
office in any instances where the original recorded assignments have been lost;
(4) Either: (i) originals of all title insurance policies relating to
the Mortgaged Properties to the extent the Seller obtained such policies or (ii)
copies of any title insurance policies or other evidence of lien position,
including but not limited to PIRT policies, limited liability reports and lot
book reports, to the extent the Seller obtain such policies or other evidence of
lien position, certified as true by the Seller;
The Seller shall, within ten Business Days after the receipt thereof,
and in any event, within one year of the Closing Date (or, with respect to the
Subsequent Business Loans, within one year of the related Subsequent Transfer
Date), deliver or cause to be delivered to the Indenture Trustee: (i) the
original recorded Mortgage in those instances where a copy thereof certified by
the Seller was delivered to the Indenture Trustee; (ii) the original recorded
Assignment of Mortgage from the Seller to the Indenture Trustee, which, together
with any intervening assignments of Mortgage, evidences a complete chain of
title from the originator to the Indenture Trustee in those instances where
copies thereof certified by the Seller were delivered to the Indenture Trustee;
and (iii) any intervening assignments of Mortgage in those instances where
copies thereof certified by the Seller were delivered to the Indenture Trustee.
Notwithstanding anything to the contrary contained in this Section 2.04, in
those instances where the public recording office retains the original Mortgage,
Assignment of Mortgage or the intervening assignments of the Mortgage after it
has been recorded, the Seller shall be deemed to have satisfied its obligations
hereunder upon delivery to the Indenture Trustee of a copy of such Mortgage,
Assignment of Mortgage or assignments of Mortgage certified by the public
recording office to be a true copy of the recorded original thereof. All
Business Loan documents held by the Indenture Trustee as to each Business Loan
are referred to herein as the "Indenture Trustee's Document File."
Although it is the intent of the parties to this Agreement that the
conveyance of the Seller's right, title and interest in and to the Business
Loans and other assets in the Trust Fund pursuant to this Agreement shall
constitute a purchase and sale and not a loan, in the event that such conveyance
is deemed to be a loan, it is the intent of the parties to this Agreement that
the Seller shall be deemed to have granted, and hereby does grant, to the Trust
a first priority perfected security interest in all of the Seller's right, title
and interest in, to and under the Business Loans and other assets in the Trust
Fund, and that this Agreement shall constitute a security agreement under
applicable law.
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All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
Section 2.05 Acceptance by Indenture Trustee of the Trust Fund;
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Certain Substitutions; Certification by
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Indenture Trustee.
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(a) The Indenture Trustee shall execute and deliver on the Closing
Date (or, with respect to the Subsequent Business Loans, on the related
Subsequent Closing Date), an acknowledgment of receipt in the form attached as
Exhibit F hereto, stating that it has received, for each Business Loan, a
Business Note, and a file, and declares that the Indenture Trustee will hold
such documents and any amendments, replacements or supplements thereto, for the
benefit of the Noteholders and the Certificateholders. The Indenture Trustee
agrees, for the benefit of the Noteholders and the Certificateholders, to review
each Indenture Trustee's Document File within 90 days after the Closing Date or
Subsequent Closing Date, as the case may be, (or, with respect to any Qualified
Substitute Business Loan, within 45 days after the assignment thereof), and to
deliver to the Seller and the Servicer a certification in the form attached
hereto as Exhibit F-1. Within 360 days after the Closing Date (or, with respect
to any Qualified Substitute Business Loan, within 360 days after the assignment
thereof), the Indenture Trustee shall deliver to the Servicer, the Seller, the
Rating Agencies and any Noteholder who requests a copy from the Indenture
Trustee a final certification in the form attached hereto as Exhibit F-2
evidencing the completeness of the Indenture Trustee's Document Files.
(b) If the Indenture Trustee, during the process of reviewing the
Indenture Trustee's Document Files finds any document constituting a part of a
Indenture Trustee's Document File which is not properly executed, has not been
received, is unrelated to a Business Loan identified in the Business Loan
Schedule, or does not conform in a material respect to the requirements of
Section 2.04 or the description thereof as set forth in the Business Loan
Schedule, the Indenture Trustee shall promptly so notify the Servicer and the
Seller. In performing any such review, the Indenture Trustee may conclusively
rely on the Seller as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Indenture Trustee's
review of the Indenture Trustee's Document Files is limited solely to confirming
that the documents listed in Section 2.04 have been executed and received and
relate to the Business Loans identified in the Business Loan Schedule. The
Seller agrees to use reasonable efforts to remedy a material defect in a
document constituting part of a Business File of which it is so notified by the
Indenture Trustee. If, however, within 60 days after the Indenture Trustee's
notice to it respecting such material defect the Seller has not remedied the
defect and such defect materially and adversely affects the value of the related
Business Loan, the Seller will (i) substitute in lieu of such Business Loan a
Qualified Substitute Business Loan in the manner and subject to the conditions
set forth in Section 3.03 or (ii) purchase such Business Loan at a purchase
price equal to the Principal Balance of such Business Loan as of the date of
purchase, plus 30 days' interest on such Principal Balance, computed at the
Adjusted Business Loan Remittance Rate as of the next succeeding Determination
Date, plus any accrued unpaid
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Servicing Fees, Monthly Advances and Servicing Advances reimbursable to the
Servicer, which purchase price shall be deposited in the Principal and Interest
Account on the next succeeding Determination Date.
(c) Upon receipt by the Indenture Trustee of a certification of a
Servicing Officer of the Servicer of such purchase and the deposit of the
amounts described above in the Principal and Interest Account (which
certification shall be in the form of Exhibit I hereto), the Indenture Trustee
shall release to the Servicer for release to the Seller the related Indenture
Trustee's Document File and the Indenture Trustee shall execute, without
recourse, and deliver such instruments of transfer necessary to transfer such
Business Loan to the Seller. All costs of any such transfer shall be borne by
the Servicer.
(d) If in connection with taking any action the Servicer requires any
item constituting part of the Indenture Trustee's Document File, or the release
from the lien of the related Business Loan of all or part of any Mortgaged
Property or other Collateral, the Servicer shall deliver to the Indenture
Trustee a certificate to such effect in the form attached as Exhibit I hereto.
Upon receipt of such certification, the Indenture Trustee shall deliver to the
Servicer the requested documentation and the Indenture Trustee shall execute,
without recourse, and deliver such instruments of transfer necessary to release
all or the requested part of the Mortgaged Property or other Collateral from the
lien of the related Business Loan.
On the Remittance Date in March of each year commencing March 2000,
the Indenture Trustee shall deliver to the Seller and the Servicer a
certification detailing all transactions with respect to the Business Loans for
which the Indenture Trustee holds a Indenture Trustee's Document File pursuant
to this Agreement during the prior calendar year. Such certification shall list
all Indenture Trustee's Document Files which were released by or returned to the
Indenture Trustee during the prior calendar year, the date of such release or
return and the reason for such release or return.
Section 2.06 [Reserved].
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Section 2.07 [Reserved].
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Section 2.08 Fees and Expenses of the Owner Trustee and the
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Indenture Trustee.
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The fees and expenses of the Owner Trustee and the Indenture Trustee
including (i) the annual fees of the Owner Trustee and the Indenture Trustee,
payable quarterly in advance, and subject to rebate to the Servicer as
additional servicing compensation hereunder for any fraction of a calendar
quarter in which this Agreement terminates, (ii) any other fees and expenses to
which the Owner Trustee and the Indenture Trustee are entitled, and (iii)
reimbursements to the Servicer for any advances made by the Servicer to the
Expense Account pursuant to Section 5.03 hereof, shall be paid from the Expense
Account in the manner set forth in Section 5.03 hereof; provided, however, that
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the Seller shall be liable for any expenses of the Trust Fund incurred prior to
the Closing Date. The Servicer, the Indenture
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Trustee and the Owner Trustee hereby covenant with the Noteholders and the
Certificateholders that every material contract or other material agreement
entered into by the Owner Trustee, the Indenture Trustee, or the Servicer,
acting as attorney-in-fact for the Indenture Trustee or the Owner Trustee, on
behalf of the Trust Fund shall expressly state therein that no Noteholder or
Certificateholder shall be personally liable in connection with such contract or
agreement.
Section 2.09 Transfer and Conveyance of the Subsequent
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Business Loans.
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(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Indenture Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Seller of all or a portion of the
balance of funds in the Pre-Funding Account, the Seller shall on any Subsequent
Transfer Date contribute, transfer, assign, set over and otherwise convey
without recourse, to the Trust all right, title and interest of the Seller in
and to each Subsequent Business Loan listed on the Business Loan Schedule
delivered by the Seller on such Subsequent Transfer Date, all its right, title
and interest in and to principal collected and interest accruing on each such
Subsequent Business Loan on and after the related Subsequent Cut-Off Date and
all its right, title and interest in and to all insurance policies; provided,
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however, that the Seller reserves and retains all its right, title and interest
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in and to principal (including Principal Prepayments) collected and interest
accruing on each such Subsequent Business Loan prior to the related Subsequent
Cut-Off Date. The transfer by the Seller of the Subsequent Business Loans set
forth on the Business Loan Schedule to the Trust shall be absolute and shall be
intended by all parties hereto to be treated as a contribution by the Seller.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate Principal Balances as of the related Subsequent
Transfer Date of the Subsequent Business Loans so transferred.
(b) The Seller shall transfer to the Trust the Subsequent Business
Loans and the other property and rights related thereto described in paragraph
(a) above only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture Trustee with a
timely Addition Notice and shall have provided any information
reasonably requested by it with respect to the Subsequent Business
Loans;
(ii) the Seller shall have delivered to the Indenture Trustee a
duly executed written assignment (including an acceptance by the
Indenture Trustee) that shall include a Business Loan Schedule,
listing the Subsequent Business Loans and any other exhibits listed
thereon;
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(iii) the Seller shall have deposited in the applicable
Principal and Interest Account all collections in respect of the
Subsequent Business Loans received on or after the related Subsequent
Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Seller
nor the Servicer was insolvent nor will either of them have been made
insolvent by such transfer nor is either of them aware of any pending
insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Trust Fund or the Holders of the Notes and the
Certificates;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the Seller shall have delivered to the Indenture Trustee
an Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related
Subsequent Transfer Agreement;
(viii) the Seller shall have delivered to the Rating Agencies,
the Owner Trustee and the Indenture Trustee, Opinions of Counsel with
respect to the transfer of the Subsequent Business Loans substantially
in the form of the Opinions of Counsel delivered to the Indenture
Trustee and the Owner Trustee on the Closing Date (bankruptcy,
corporate and tax opinions);
(ix) such addition will not cause the Principal Balance of the
Business Loans secured by accounts receivables and inventory to be
greater than 25% of the aggregate Principal Balance of the Business
Loans; and
(x) such addition will not cause the Principal Balance of the
Business Loans secured by first liens on commercial real estate or
machinery and equipment to be less than 70% of the aggregate Principal
Balance of the Business Loans; provided however, in no event shall any
such transfer cause 50% or more of the aggregate Principal Balance of
the Business Loans to be "real estate mortgages (or interest therein)"
within the meaning of Section 7701(i)(A)(i) of the Code and Treasury
Regulations Section 301.7701-1(d).
(c) The obligation of the Trust to purchase a Subsequent Business
Loan on any Subsequent Transfer Date is subject to the requirement, as evidenced
by a certificate from a Responsible Officer of the Seller, that such Subsequent
Business Loan conforms in all material respects to the representations and
warranties concerning the individual Initial Business Loans set forth in
Sections 3.01 and 3.02 (except that any reference therein to the Cut-Off Date
shall be deemed a reference to the applicable Subsequent Cut-Off Date) or in the
Private Placement Memorandum under the heading "The Business Loan Pool-
Subsequent Business Loans" and that the inclusion of all Subsequent Business
Loans being transferred to the Trust on such
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Subsequent Transfer Date will not change, in any material respect, the
characteristics of the Initial Business Loans in the aggregate, set forth in
Sections 3.01 and 3.02.
(d) In connection with the transfer and assignment of the Subsequent
Business Loans, the Seller agrees to satisfy the conditions set forth in
Sections 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the
Remittance Dates in January, February and March 1999 and the Special Remittance
Date, the Seller shall determine, and the Indenture Trustee shall cooperate with
the Seller in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirements and the Pre-Funding Earnings and (ii) any
other necessary matters in connection with the administration of the Pre-Funding
Account and of the Capitalized Interest Account. If any amounts are incorrectly
released to the Seller from the Capitalized Interest Account, the Seller shall
immediately repay such amounts to the Indenture Trustee.
(f) No later than March 31, 1999, the Seller shall obtain a letter
from an independent accountant stating whether or not the characteristics of the
Subsequent Business Loans conform to the characteristics set forth herein.
Section 2.10 Optional Purchase of Defaulted Business Loans.
The Servicer shall have the right, but not the obligation, to purchase
any Defaulted Business Loan for a purchase price equal to the then outstanding
principal balance of such Defaulted Business Loan as of the date of such
purchase plus accrued interest thereon at the Adjusted Business Loan Remittance
Rate, which purchase price shall be deposited in the Principal and Interest
Account on the next succeeding Determination Date. In no event, however, may
the aggregate principal balance of all Defaulted Business Loans purchased
pursuant to this Section 2.10 exceed 5% of the sum of (i) the Original Pool
Principal Balance and (ii) the initial Pre-Funded Amount.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01 Representations of the Seller.
-----------------------------
The Seller hereby represents and warrants to the Indenture Trustee,
the Owner Trustee, the Certificateholders and the Noteholders as of the Closing
Date:
(a) The Seller is a nationally chartered bank duly organized and
validly existing under the laws of the United States and has all licenses
necessary to carry on its business as now being conducted and is licensed and
qualified in each state where the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the Seller
and perform its obligations hereunder; the Seller has all requisite power and
authority to execute and deliver this Agreement and each other Basic Document to
which it is a party and to perform in accordance herewith and therewith; the
execution, delivery and performance of this Agreement and each other Basic
Document to which it is a party (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; this Agreement and each other
Basic Document to which it is a party evidence the valid, binding and
enforceable obligations of the Seller; and all requisite corporate action has
been taken by the Seller to make this Agreement and each other Basic Document to
which it is a party valid, binding and enforceable upon the Seller in accordance
with its respective terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in any
proceeding, whether at law or in equity, none of which will affect the ownership
of the Business Loans by the Trust.
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc., under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the Notes
and the execution and delivery by the Seller of the documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending proceedings
or appeals (administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions contemplated by this
Agreement and each other Basic Document to which it is a party and the other
documents on the part of the Seller and the performance by the Seller of its
obligations under this Agreement and the other Basic Documents to which it is a
party;
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(c) The consummation of the transactions contemplated by this
Agreement and the other Basic Documents to which the Seller is a party will not
result in the breach of any terms or provisions of the articles of association
or by-laws of the Seller or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit agreement
or other material instrument to which the Seller or its property is subject, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the or its property is subject;
(d) Neither this Agreement or any other Basic Document to which the
Seller is a party nor any statement, report or other document furnished or to be
furnished pursuant to this Agreement or any other Basic Document to which the
Seller is a party or in connection with the transactions contemplated hereby and
thereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made;
(e) The Seller does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement or any other Basic Document to which the Seller is a party;
(f) There is no action, suit, proceeding or investigation pending or,
to the best of the Seller's knowledge, threatened against the Seller which,
either in any one instance or in the aggregate, may (i) result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Seller or in any material impairment of the right or ability of
the to carry on its business substantially as now conducted, or in any material
liability on the part of the Seller or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement or any other Basic Document to which the Seller is a
party or (ii) which would draw into question the validity of this Agreement or
any other Basic Document to which the Seller is a party or the Business Loans;
(g) The Trust will not constitute an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(h) The Seller is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Seller or its properties or might have consequences that would materially
and adversely affect its performance hereunder;
(i) The statements contained in the Private Placement Memorandum which
describe the Seller or the Business Loans or matters or activities for which the
Seller is responsible in accordance with the Private Placement Memorandum, this
Agreement or any other Basic Document to which the Seller is a party and all
documents referred to therein or herein or delivered in connection therewith or
herewith, or which are attributable to the Seller therein or
12
herein are true and correct in all material respects, and the Private Placement
Memorandum does not contain any untrue statement of a material fact with respect
to the Seller or the Business Loans and does not omit to state a material fact
necessary to make the statements contained therein with respect to the Seller or
the Business Loans not misleading in light of the circumstances under which they
were made. The Seller is not aware that the Private Placement Memorandum
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained therein not misleading in light
of the circumstances under which they were made. There is no fact peculiar to
the Seller or the Business Loans and known to the Seller that materially
adversely affects or in the future may (so far as the Seller can now reasonably
foresee) materially adversely affect the Seller or the Business Loans that has
not been set forth in the Private Placement Memorandum;
(j) No Noteholder or Certificateholder is subject to Connecticut state
licensing requirements solely by virtue of holding the Notes or the
Certificates;
(k) The transfer, assignment and conveyance of the Business Notes and
the Mortgages by the Seller pursuant to this Agreement are not or, with respect
to the Subsequent Business Loans, will not be, subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction;
(l) The origination and collection practices used by the Seller with
respect to each Business Note and Mortgage relating to the Initial Business
Loans have been, and the origination and collection practices to be used by the
Seller with respect to each Business Note and Mortgage relating to the
Subsequent Business Loans will have been, in all material respects legal,
proper, prudent and customary in the business loan origination and servicing
business;
(m) Each Initial Business Loan was, and each Subsequent Business Loan
will be, selected from among the existing business loans in the Seller's
portfolio at the date hereof or, in the case of the Subsequent Business Loans,
at the related Subsequent Cut-Off Date, in a manner not designed to adversely
affect the Noteholders or the Certificateholders;
(n) The Seller received fair consideration and reasonably equivalent
value or, in the case of the Subsequent Business Loans, will have received fair
consideration and reasonably equivalent value, in exchange for the sale of the
Business Loans;
(o) Neither the Seller nor any of its affiliates sold or, in the case
of the Subsequent Business Loans, will have sold any interest in any Business
Loan with any intent to hinder, delay or defraud any of their respective
creditors;
(p) The Seller is solvent, and the Seller will not be rendered
insolvent as a result of the transfer of the Business Loans to the Trust or the
sale of the Notes; and
(q) The chief executive office and legal name of the Seller is as set
forth on the respective UCC-1 financing statement filed on behalf of the Seller
pursuant to Section 2.04(a)(4),
13
such office is the place where the Seller is "located" for the purposes of
Section 9-103(3)(d) of the Uniform Commercial Code as in effect in the State of
New York, and neither the location of such office nor the legal name of the
Seller has changed in the past four months.
Section 3.02 Individual Business Loans.
-------------------------
The Seller hereby represents and warrants to the Indenture Trustee and
the Noteholders, with respect to each Initial Business Loan as of the Closing
Date, and with respect to each Subsequent Business Loan, as of the related
Subsequent Transfer Date:
(a) The information with respect to each Business Loan set forth in
the Business Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in
Section 2.04 (including all material documents related thereto) has been or will
be delivered to the Indenture Trustee on the Closing Date or as otherwise
provided in Section 2.04;
(c) Each Mortgaged Property serving as the primary collateral is
improved by a Commercial Property or a Residential Property and does not
constitute other than real property under state law;
(d) Each Initial Business Loan was (and each Subsequent Business Loan
will be) originated and underwritten by the Seller, in its capacity as Seller
and each Business Loan is being serviced by the Seller, in its capacity as
Servicer;
(e) [Intentionally Omitted];
(f) Approximately 27.06% of the Initial Business Loans (by Principal
Balance) bear fixed rates of interest and approximately 54.00%, .46%, 11.48% and
7.00% of the Business Loans (by Principal Balance) bear interest that adjusts
monthly based on the Prime Rate, annually based on One-Year CMT, every five
years based on Five-Year CMT, and every ten years based on Ten-Year CMT,
respectively. Except for up to approximately 9.7% of the Business Loans (by
Principal Balance) that are Balloon Loans, each Business Note will, with respect
to principal payments, provide for a schedule of Monthly Payments which are, if
timely paid, sufficient to fully amortize the principal balance of such Business
Loan on its respective maturity date;
(g) With respect to those Business Loans secured by a Mortgaged
Property, each Mortgage is a valid and subsisting lien of record on the
Mortgaged Property subject only to any applicable Prior Liens on such Mortgaged
Property and subject in all cases to such exceptions that are generally
acceptable to banking institutions in connection with their regular commercial
lending activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Mortgage;
14
(h) Immediately prior to the transfer and assignment herein
contemplated, the Seller held good and indefeasible title to, and was the sole
owner of, each Business Loan conveyed by the Seller subject to no liens,
charges, mortgages, encumbrances or rights of others except liens which will be
released simultaneously with such transfer and assignment; and immediately upon
the transfer and assignment herein contemplated, the Trust will hold good and
indefeasible title, to, and be the sole owner of, each Business Loan subject to
no liens, charges, mortgages, encumbrances or rights of others except liens
which will be released simultaneously with such transfer and assignment;
(i) As of the Cut-Off Date (or, with respect to any Subsequent
Business Loan, as of the related Subsequent Cut-Off Date), no Business Loan is
more than 30 days delinquent in payment;
(j) To the best of the Seller's knowledge, there is no delinquent tax
or assessment lien on any Mortgaged Property which is the primary Collateral for
the related Business Loan, and each Mortgaged Property is free of material
damage and is in good repair;
(k) No Business Loan is subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Business Note or any related Mortgage, or the
exercise of any right thereunder, render either the Business Note or any related
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(l) Each Business Loan at the time it was made complied, and as of the
Closing Date complies, in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws;
(m) Each Initial Business Loan was (and each Subsequent Business Loan
will be) originated and underwritten or purchased and reunderwritten by the
Business in accordance with the underwriting criteria set forth in the Private
Placement Memorandum;
(n) The Seller requires that the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
representing coverage described in Section 4.07;
(o) The Seller requires that if a Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy is in effect with respect
to such Mortgaged Property with a generally acceptable carrier in an amount
representing coverage described in Section 4.07;
(p) Each Business Note, any related Mortgage and any other agreement
pursuant to which Collateral is pledged to the Seller is the legal, valid and
binding obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be
15
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), none of which will prevent the ultimate realization of the security
provided by the Collateral or other agreement, and all parties to each Business
Loan had full legal capacity to execute all Business Loan documents and convey
the estate therein purported to be conveyed;
(q) The Seller has caused and will cause to be performed any and all
acts reasonably required to be performed to preserve the rights and remedies of
the Indenture Trustee and the Owner Trustee in any insurance policies applicable
to the Business Loans including, without limitation, in each case, any necessary
notifications of insurers, assignments of policies or interests therein, and
establishments of co-insured, joint loss payee and mortgagee rights in favor of
the Indenture Trustee or the Seller, respectively;
(r) Each original Mortgage was recorded, and all subsequent
assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of the Seller (or, subject to Section 2.04 hereof, are in
the process of being recorded);
(s) Each Business Loan conforms, and all such Business Loans in the
aggregate conform, to the description thereof set forth in the Private Placement
Memorandum;
(t) The terms of the Business Note and the related Mortgage or other
security agreement pursuant to which Collateral was pledged have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Noteholders and the Certificateholders and which has been delivered to the
Indenture Trustee;
(u) There are no material defaults in complying with the terms of any
applicable Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable;
(v) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the Business Loan
or the use for which the premises were intended;
(w) Each Mortgaged Property which is the primary collateral for the
related Business Loan underwent, at the time of origination of such Business
Loan, the standard environmental studies and such studies revealed that such
Mortgaged Property was free of
16
contamination from toxic substances or hazardous wastes requiring action under
applicable laws or is subject to ongoing environmental rehabilitation
satisfactory to the Seller;
(x) The proceeds of the Business Loan have been fully disbursed, and
there is no obligation on the part of the Seller to make future advances
thereunder. Any and all requirements as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in
making or closing or recording the Business Loans were paid;
(y) There is no obligation on the part of the Seller or any other
party (except for any guarantor of a Business Loan) to make Monthly Payments
(except for Monthly Advances) in addition to those made by the Obligor;
(z) No statement, report or other document signed by the Seller
constituting a part of the Business File contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which they
were made;
(aa) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Noteholders and/or the
Certificateholders to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Obligor;
(bb) No Business Loan has a shared appreciation feature, or other
contingent interest feature;
(cc) With respect to each Business Loan secured by a Mortgaged
Property or other Collateral and that is not a first priority lien, either (i)
no consent for the Business Loan is required by the holder of any related Prior
Lien or (ii) such consent has been obtained;
(dd) Each Business Loan was originated to a business located in the
State identified in the Business Loan Schedule;
(ee) All parties which have had any interest in the Business Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
any Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(ff) Any related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the
17
Mortgaged Property of the benefits of the security, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. There is no homestead or other exemption
available to the Mortgagor which would materially interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(gg) There is no default, breach, violation or event of acceleration
existing under the Business Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and the Seller, in its
capacity as either Servicer or Seller, has not waived any default, breach,
violation or event of acceleration;
(hh) All parties to the Business Note and any related Mortgage or
other document pursuant to which Collateral was pledged had legal capacity to
execute the Business Note and any such Mortgage or other document and each
Business Note and Mortgage or other document have been duly and properly
executed by such parties;
(ii) The Business Loan was not selected for inclusion under this
Agreement from the Seller's portfolio of comparable business loans on any basis
which would have a material adverse affect on a Noteholder or Certificateholder;
(jj) All amounts received on or after the Cut-Off Date (or, with
respect to the Subsequent Business Loans, on or after the related Subsequent
Cut-Off Date) with respect to the Business Loans have been, to the extent
required by this Agreement, deposited into the Principal and Interest Account
and are, as of the Closing Date (or with respect to the Subsequent Business
Loans, as of the related Subsequent Closing Date), in the Principal and Interest
Account;
(kk) With respect to those Business Loans secured by Collateral other
than a Mortgaged Property, the related Business Note, security agreements, if
any, and UCC-1 filed with respect to such Collateral creates a valid and
subsisting lien of record on such Collateral subject only to any Prior Liens, if
any, on such Collateral and subject in all cases to such exceptions that are
generally acceptable to lending institutions in connection with their regular
commercial lending activities, and such other exceptions to which similar
Collateral is commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Business Note, security agreement and UCC-1; and
(ll) As of the Closing Date, less than 50% of the Business Loans, by
Principal Balance, are (and after the Funding Period less than 50% of Initial
Business Loans and Subsequent Business Loans will be) "real estate mortgages (or
interests therein)" within the meaning of Section 7701(i)(A)(i) of the Code and
Treasury regulations Section 301.7701-1(d).
Section 3.03 Purchase and Substitution of Defective
--------------------------------------
Loans.
-----
18
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive delivery of the Notes to the
Noteholders and the Certificates to the Certificateholders. Upon discovery by
the Servicer, any Subservicer, the Owner Trustee or the Indenture Trustee of a
breach of any of such representations and warranties which materially and
adversely affects the value of the Business Loans or the interest of the Notes
and Certificates therein or which materially and adversely affects the interests
of the Notes and Certificates in the related Business Loan in the case of a
representation and warranty relating to a particular Business Loan
(notwithstanding that such representation and warranty was made to the Seller's
best knowledge), the party discovering such breach shall give prompt written
notice to the others. Within 60 days of the earlier of its discovery or its
receipt of notice of any breach of a representation or warranty, the Seller
shall (a) promptly cure such breach in all material respects, (b) purchase such
Business Loan by depositing in the applicable Principal and Interest Account, on
the next succeeding Determination Date, an amount in the manner specified in
Section 2.05(b), or (c) if within two years of the Closing Date, remove such
Business Loan from the Trust Fund (in which case it shall become a Deleted
Business Loan) and substitute one or more Qualified Substitute Business Loans
provided such substitution is effected not later than the date which is two
years after the Closing Date or at such later date, if the Indenture Trustee
receives an Opinion of Counsel that such substitution would not constitute a
Prohibited Transaction at any time the Notes are outstanding. Any such
substitution shall be accompanied by payment by the Seller of the Substitution
Adjustment, if any.
As to any Deleted Business Loan for which the Seller substitutes a
Qualified Substitute Business Loan or Loans, the Servicer shall effect such
substitution by delivering to the Indenture Trustee a certification in the form
attached hereto as Exhibit I, executed by a Servicing Officer, and shall also
deliver to the Indenture Trustee, the documents constituting the Indenture
Trustee's Document File for such Qualified Substitute Business Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest
Account all payments of principal received in connection with such Qualified
Substitute Business Loan or Loans after the date of such substitution together
with all interest (net of the Servicing Fee). Monthly Payments received with
respect to Qualified Substitute Business Loans on or before the date of
substitution will be retained by the Seller. The Trust will own all payments
received with respect to the Deleted Business Loan on or before the date of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Business Loan. The Servicer
shall give written notice to the Indenture Trustee that such substitution has
taken place and shall amend the Business Loan Schedule to reflect the removal of
such Deleted Business Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Business Loan or Loans. Upon such substitution, such
Qualified Substitute Business Loan or Loans shall be subject to the terms of
this Agreement in all respects, including Sections 2.04 and 2.05, and the Seller
shall be deemed to have made with respect to such Qualified Substitute Business
Loan or Loans, as of the date of substitution, the covenants, representations
and warranties set forth in Sections 3.01 and 3.02. On the date of such
19
substitution, the Seller will remit to the Servicer, and the Servicer will
deposit into the applicable Principal and Interest Account an amount equal to
the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in
Section 2.05 and this Section 3.03, the Seller shall indemnify and hold harmless
the Trust, the Indenture Trustee, the Noteholders and the Certificateholders
against any loss, damages, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Seller's representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in Sections 2.05 and 3.03 to cure, purchase or substitute for a defective
Business Loan and to indemnify the Noteholders, the Certificateholders, the
Indenture Trustee and the Owner Trustee as provided in Sections 2.05 and 3.03
constitute the sole remedies of the Indenture Trustee, the Noteholders, the
Certificateholders and the Owner Trustee, respecting a breach of the foregoing
representations and warranties.
Any cause of action against the Servicer or the Seller relating to or
arising out of the breach of any representations and warranties made in Sections
2.05, 3.01 or 3.02 shall accrue as to any Business Loan upon (i) discovery of
such breach by any party and notice thereof to the Seller and or notice thereof
by the Seller to the Indenture Trustee, (ii) failure by the Seller to cure such
breach or purchase or substitute such Business Loan as specified above, and
(iii) demand upon the Seller by the Indenture Trustee for all amounts payable
hereunder in respect of such Business Loan.
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ARTICLE IV.
ADMINISTRATION AND SERVICING OF BUSINESS LOANS
----------------------------------------------
Section 4.01 Duties of the Servicer.
----------------------
(a) The Servicer, as an independent contract servicer, shall service
and administer the Business Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Business Loans so long as the
Rating Agency Condition is satisfied. The Servicer shall be entitled to
terminate any Subservicing Agreement in accordance with the terms and conditions
of such Subservicing Agreement and to either itself directly service the related
Business Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(b) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Indenture Trustee and the Noteholders for the servicing and administering of the
Business Loans in accordance with the provisions of this Agreement, without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Business Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Business Loans when any Subservicer has received such payments. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Business Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Indenture Trustee and the
Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in Section 4.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of a Servicer Termination Event), the Indenture
Trustee or its designee shall, subject to Section 9.02 hereof, thereupon assume
all of the rights and obligations of the Servicer under each Subservicing
Agreement that the Servicer may have entered into, unless the Indenture Trustee
is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms. The Indenture Trustee, its designee or the successor
servicer for the Indenture Trustee shall be deemed to have assumed all of the
Servicer's interest therein and to
21
have replaced the Servicer as a party to each Subservicing Agreement to the same
extent as if the Subservicing Agreements had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under the Subservicing Agreements. The Servicer at its expense
and without right of reimbursement therefor, shall, upon request of the
Indenture Trustee, deliver to the assuming party all documents and records
relating to each Subservicing Agreement and the Business Loans then being
serviced and an accounting of amounts collected and held by it and otherwise use
its best efforts to effect the orderly and efficient transfer of the
Subservicing Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Business Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Obligor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Noteholders, provided, however, that (unless (x) the Obligor is
-------- -------
in default with respect to the Business Loan, or such default is, in the
judgment of the Servicer, imminent and (y) the Servicer determines that any
modification would not be considered a new loan for federal income tax purposes)
the Servicer may not permit any modification with respect to any Business Loan
that would change the Business Loan Interest Rate, defer (subject to Section
4.12), or forgive the payment of any principal or interest (unless in connection
with the liquidation of the related Business Loan), or extend the final maturity
date on such Business Loan. No costs incurred by the Servicer or any
Subservicer in respect of Servicing Advances shall for the purposes of
distributions to Noteholders be added to the amount owing under the related
Business Loan. Without limiting the generality of the foregoing, the Servicer
shall continue, and is hereby authorized and empowered to execute and deliver on
behalf of the Trust, the Indenture Trustee, the Owner Trustee, each Noteholder
and each Certificateholder, all instruments of satisfaction or cancellation, or
of partial or full release, discharge and all other comparable instruments, with
respect to the Business Loans and with respect to any Mortgaged Properties or
other Collateral. If reasonably required by the Servicer, the Indenture
Trustee, on behalf of the Trust, shall furnish the Servicer, within 5 Business
Days of receipt of the Servicer's request, with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement. Any such request to
the Indenture Trustee, on behalf of the Trust, shall be accompanied by a
certification in the form of Exhibit I attached hereto signed by a Servicing
Officer.
The Servicer, in servicing and administering the Business Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
Foreclosed Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering business loans
for its own account, giving due consideration to the Noteholders' and
Certificateholders' reliance on the Servicer.
(g) On and after such time as the Indenture Trustee and the Trust
receive the resignation of, or notice of the removal of, the Servicer from its
rights and obligations under this Agreement, and with respect to resignation
pursuant to Section 8.04, after receipt of the Opinion of Counsel required
pursuant to Section 8.04 addressed to the Indenture Trustee, the Indenture
22
Trustee or its designee shall assume all of the rights and obligations of the
Servicer, subject to Section 9.02 hereof. The Servicer shall, upon request of
the Indenture Trustee but at the expense of the Servicer, deliver to the
Indenture Trustee all documents and records (including computer tapes and
diskettes) relating to the Business Loans and an accounting of amounts collected
and held by the Servicer and otherwise use its best efforts to effect the
orderly and efficient transfer of servicing rights and obligations to the
assuming party.
(h) The Servicer shall perform the duties of the Issuer and the Owner
Trustee under the Basic Documents. In furtherance of the foregoing, the
Servicer shall consult with the Owner Trustee as the Servicer deems appropriate
regarding the duties of the Issuer and the Owner Trustee under the Basic
Documents. The Servicer shall monitor the performance of the Issuer and the
Owner Trustee and shall advise the Owner Trustee when action is necessary to
comply with the Issuer's or the Owner Trustee's duties under the Basic
Documents. The Servicer shall prepare for execution by the Owner Trustee or
shall cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Basic Documents.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer to prepare, file or deliver pursuant to state and
federal tax and securities laws. In accordance with the directions of the
Issuer or the Owner Trustee, the Servicer shall administer, perform or supervise
the performance of such other activities in connection with the Issuer as are
not covered by any of the foregoing provisions and as are expressly requested by
the Issuer or the Owner Trustee and are reasonably within the capability of the
Servicer.
(j) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Servicer shall be responsible for promptly
notifying the Owner Trustee and the Paying Agent in the event that any
withholding tax is imposed on the Issuer's payments (or allocations of income)
to a Noteholder or a Certificateholder. Any such notice shall be in writing and
specify the amount of any withholding tax required to be withheld by the Owner
Trustee or the Paying Agent pursuant to such provision.
(k) The Servicer shall prepare and file, on behalf of the Issuer, all
tax returns tax elections, financial statements and such annual or other reports
of the Issuer as are necessary for the preparation of tax reports as provided in
the Trust Agreement or required by applicable law. All tax returns will be
signed by the Servicer on behalf of the Issuer.
(l) The Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Owner Trustee at
any time during normal business hours.
23
(m) The Servicer shall furnish to the Owner Trustee from time to time
such additional information regarding the Issuer or the Basic Documents as the
Owner Trustee shall reasonably request.
For so long as any of the Notes are outstanding and are "restricted
securities" within the meaning of Rule 144 (a) (3) of the Securities Act, (1)
the Servicer will provide or cause to be provided to any holder of such Notes
and any prospective purchaser thereof designated by such holder, upon the
request of such a holder or prospective purchaser, the information required to
be provided to such holder or prospective purchaser by Rule 144A(d) (4) under
the Securities Act; and (2) the Servicer shall update such information from time
to time in order to prevent such information from becoming false and misleading
and will take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under Rule
144A is and will be available for resales of such Notes conducted in accordance
with Rule 144A.
Section 4.02 Liquidation of Business Loans.
-----------------------------
In the event that any payment due under any Business Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Obligor fails to perform any other covenant or
obligation under the Business Loan, the Servicer shall take such action as it
shall deem to be in the best interests of the Noteholders and
Certificateholders. The Servicer shall foreclose upon or otherwise comparably
effect the ownership in the name of the Trust of Mortgaged Properties or other
Collateral relating to defaulted Business Loans for which the related Business
Loan is still outstanding, as to which no satisfactory arrangements can be made
for collection of delinquent payments in accordance with the provisions of
Section 4.10. In connection with such foreclosure or other conversion, the
Servicer shall exercise collection and foreclosure procedures with the same
degree of care and skill in its exercise or use as it would exercise or use
under the circumstances in the conduct of its own affairs. Any amounts advanced
in connection with such foreclosure or other action shall constitute "Servicing
Advances." The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes on Mortgaged Properties in
determining whether to foreclose upon or otherwise comparably convert the
ownership of such Mortgaged Property, and will not foreclose on a Mortgaged
Property where it has cause to believe such substances exist unless it (i) has
received a Phase I environmental report and such report reveals no environmental
problems, or (ii) any problems revealed by such Phase I environmental report
have been corrected or such Mortgaged Property is subject to an environmental
rehabilitation for which the Servicer is not responsible.
After a Business Loan has become a Liquidated Business Loan, the
Servicer shall promptly prepare and forward to the Indenture Trustee and upon
request, any Noteholder or Certificateholder, a Liquidation Report, in the form
attached hereto as Exhibit J, detailing the Liquidation Proceeds received from
the Liquidated Business Loan, expenses incurred with respect thereto, and any
loss incurred in connection therewith.
24
Section 4.03 Establishment of Principal and
------------------------------
Interest Accounts; Deposits in
------------------------------
Principal and Interest Accounts.
-------------------------------
(a) The Servicer shall cause to be established and maintained one or
more Principal and Interest Accounts, in one or more Eligible Deposit Accounts,
in the form of time deposit or demand accounts, which may be interest-bearing or
such accounts may be trust accounts wherein the moneys therein are invested in
Permitted Instruments, titled "First National Bank of New England, as Servicer,
in trust for the registered holders of FNBNE Business Loan Notes, Series 1998-
A." All funds in such Principal and Interest Accounts shall be insured by the
BIF or SAIF administered by the FDIC to the maximum extent provided by law. The
creation of any Principal and Interest Account shall be evidenced by a letter
agreement in the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Indenture
Trustee, the Owner Trustee and, upon request, any Noteholder or
Certificateholder.
(b) The Servicer and each Subservicer shall deposit without
duplication (within two Business Days of receipt thereof) in the applicable
Principal and Interest Account and retain therein:
(i) all payments received on or after the Cut-Off Date on
account of principal on the Business Loans, including all Excess
Payments, Principal Prepayments and Curtailments collected on or after
the Cut-Off Date;
(ii) all payments received on or after the Cut-Off Date on
account of interest on the Business Loans (net of the Servicing Fee
with respect to each Business Loan and other servicing compensation
payable to the Servicer as permitted herein);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds (other than amounts to be applied
to restoration or repair of any related Mortgaged Property, or to be
released to the Obligor in accordance with customary servicing
procedures);
(v) all Released Mortgaged Property Proceeds and any other
proceeds from any other released property securing the Business Loans;
(vi) any amounts paid in connection with the repurchase of any
Business Loan and the amount of any Substitution Adjustment received
pursuant to Sections 2.05 and 3.03;
25
(vii) any amount required to be deposited in the Principal and
Interest Account pursuant to Section 4.04 or 4.10; and
(viii) the amount of any losses incurred in connection with
investments in Permitted Instruments.
(c) The foregoing requirements for deposit in the applicable Principal
and Interest Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments with respect to the
Servicing Fee (to the extent received and permitted by Section 6.03), with
respect to each Business Loan, together with the difference between any
Liquidation Proceeds and the related Net Liquidation Proceeds, need not be
deposited by the Servicer in the applicable Principal and Interest Account.
(d) Any interest earnings on funds held in the applicable Principal
and Interest Account paid by an Eligible Deposit Account shall be for the
account of the Servicer and may only be withdrawn from the applicable Principal
and Interest Account by the Servicer immediately following its monthly
remittance to the Indenture Trustee pursuant to Section 4.04(a). Any reference
herein to amounts on deposit in the applicable Principal and Interest Account
shall refer to amounts net of such investment earnings.
Section 4.04 Permitted Withdrawals From the Applicable
------------------------------------------
Principal and Interest Account.
------------------------------
The Servicer shall withdraw funds from the applicable Principal and
Interest Account for the following purposes:
(a) to effect the remittance to the Indenture Trustee on each
Determination Date for deposit into the Note Distribution Account that portion
of the Available Funds for the related Remittance Date that is net of
Compensating Interest, the Monthly Advances and amounts then on deposit in the
Spread Account (and, with respect to the Determination Dates occurring during
the Funding Period, net of amounts then on deposit in the Pre-Funding Account
and the Capitalized Interest Account);
(b) to reimburse itself for any accrued unpaid Servicing Fees,
unreimbursed Monthly Advances and for unreimbursed Servicing Advances to the
extent deposited in the Principal and Interest Account (and not netted from
Monthly Payments received). The Servicer's right to reimbursement for unpaid
Servicing Fees and, except as provided in the following sentence, Servicing
Advances and Monthly Advances shall be limited to Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Obligor or otherwise relating to the Business
Loan in respect of which such unreimbursed amounts are owed. The Servicer's
right to reimbursement for Servicing Advances and Monthly Advances in excess of
such amounts shall be limited to any late collections of interest received on
the Business Loans generally, including Liquidation Proceeds, Released Mortgaged
Property Proceeds, Insurance Proceeds and any other amounts;
26
provided, however, that the Servicer's right to such reimbursement pursuant
-------- -------
hereto shall be subordinate to the rights of the Noteholders and may be
exercised only if the Spread Balance equals the then applicable Specified
Spread Account Requirement;
(c) to withdraw any amount received from an Obligor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay
to itself, as permitted by Section 4.03(d), interest paid in respect of
Permitted Instruments or by an Eligible Deposit Account on funds deposited in
the Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and Interest
Account that were not required to be deposited therein or were deposited therein
in error;
(f) to pay itself servicing compensation pursuant to Section 6.03
hereof or interest as permitted under the definition of Excess Proceeds; and
(g) to clear and terminate the Principal and Interest Accounts upon
the termination of this Agreement.
So long as no default or Servicer Termination Event shall have
occurred and be continuing, and consistent with any requirements of the Code,
the Principal and Interest Accounts shall either be maintained with an Eligible
Deposit Account as an interest-bearing account meeting the requirements set
forth in Section 4.03(a), or the funds held therein may be invested by the
Servicer (to the extent practicable) in Permitted Instruments, as directed in
writing by the Servicer. In either case, funds in the Principal and Interest
Account must be available for withdrawal without penalty, and any Permitted
Instruments must mature not later than the Business Day immediately preceding
the Determination Date next following the date of such investment (except that
if such Permitted Instrument is an obligation of the institution that maintains
such account, then such Permitted Instrument shall mature not later than such
Determination Date) and shall not be sold or disposed of prior to its maturity.
All Permitted Instruments must be held by or registered in the name of "First
National Bank of New England, as Servicer, in trust for the registered holders
of FNBNE Business Loan Notes, Series 1998-A." All interest or other earnings
from funds on deposit in the Principal and Interest Account (or any Permitted
Instruments thereof) shall be the exclusive property of the Servicer, and may be
withdrawn from the Principal and Interest Account pursuant to clause (d) above.
The amount of any losses incurred in connection with the investment of funds in
the Principal and Interest Account in Permitted Instruments shall be deposited
in the Principal and Interest Account by the Servicer from its own funds
immediately as realized without reimbursement therefor.
Section 4.05 [Intentionally Omitted]
27
Section 4.06 Transfer of Accounts.
--------------------
The Servicer may, upon written notice to the Indenture Trustee,
transfer any Principal and Interest Account to a different Eligible Deposit
Account.
Section 4.07 Maintenance of Hazard Insurance.
-------------------------------
The Servicer shall comply with the customary servicing procedures
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of a Business Loan, to the best of the Servicer's knowledge
after reasonable investigation, the related Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
the Servicer will require the related Obligor to purchase a flood insurance
policy with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the full insurable value of the
Mortgaged Property, or (ii) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. The Servicer shall also
maintain, to the extent such insurance is available, and in accordance with the
Servicer's policies, on Foreclosed Property constituting real property, fire and
hazard insurance in the amounts described above and liability insurance. Any
amounts collected by the Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the Mortgaged Property, or to be
released to the Obligor in accordance with applicable law) shall be deposited in
the Principal and Interest Account, subject to withdrawal pursuant to Section
4.04. It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of any Obligor or maintained on
Foreclosed Property, other than pursuant to such applicable laws and regulations
as shall at any time be in force and as shall require such additional insurance.
All policies required hereunder shall be endorsed with standard mortgagee
clauses with losses payable to the Servicer or its affiliates.
Section 4.08 [Intentionally Omitted].
Section 4.09 Fidelity Bond.
-------------
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000,and a maximum deductible of $100,000, if
commercially available, with coverage on all employees acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Business Loans ("Servicer Employees"). The fidelity bond shall insure the
Indenture Trustee and the Owner Trustee, their respective officers and employees
against losses resulting from forgery, theft, embezzlement or fraud by such
Servicer Employees. The errors and omissions policy shall insure against losses
resulting from the errors, omissions and negligent acts of such Servicer
employees. No provision of this Section 4.09 requiring such fidelity bond and
errors and omissions insurance shall relieve the Servicer from its duties as set
forth in this Agreement. Upon the request of the Indenture Trustee, the Owner
Trustee or any
28
Noteholder or Certificateholder, the Servicer shall cause to be
delivered to the Indenture Trustee, Owner Trustee or such Noteholder or such
Certificateholder a certified true copy of such fidelity bond and insurance
policy. The current issuer of such fidelity bond and insurance policy is The
Hartford Underwriters Insurance Company.
Section 4.10 Title, Management and Disposition
---------------------------------
of Foreclosed Property.
----------------------
In the event that title to a Mortgaged Property or other Collateral is
acquired in foreclosure or by deed in lieu of foreclosure or by other legal
process (a "Foreclosed Property"), the deed or certificate of sale, or the
repossessed Collateral shall be taken in the name of the Trust for the benefit
of the Noteholders and Certificateholders.
The Servicer, subject to Sections 4.01 and 4.02 hereof, shall manage,
conserve, protect and operate each Foreclosed Property for the Noteholders and
the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale. The Servicer shall, either itself or through an agent
selected by the Servicer, manage, conserve, protect and operate the Foreclosed
Property in the same manner that it manages, conserves, protects and operates
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the Foreclosed Property is managed.
The Servicer shall attempt to sell the same (and may temporarily rent the same)
on such terms and conditions as the Servicer deems to be in the best interest of
the Noteholders and Certificateholders.
The Servicer shall cause to be deposited in the Principal and Interest
Account, no later than five Business Days after the receipt thereof, all
revenues received with respect to the conservation and disposition of the
related Foreclosed Property net of Servicing Advances.
The disposition of Foreclosed Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer,
deems to be in the best interest of the Noteholders and the Certificateholders.
The proceeds of sale of the Foreclosed Property shall promptly, but in no event
later than two Business Days after receipt, be deposited in the Principal and
Interest Account as received from time to time and, as soon as practicable
thereafter, the expenses of such sale shall be paid, the Servicer shall, subject
to Section 4.04, reimburse itself for any related unreimbursed Servicing
Advances, unpaid Servicing Fees and unreimbursed Monthly Advances, and the
Servicer shall deposit in the Principal and Interest Account the net cash
proceeds of such sale to be distributed to the Noteholders in accordance with
Section 5.07 hereof.
Section 4.11 [Intentionally Omitted].
---------------------
Section 4.12 Collection of Certain Business
------------------------------
Loan Payments.
-------------
29
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Business Loans, and shall, to
the extent such procedures shall be consistent with this Agreement, comply with
the terms and provisions of any applicable hazard insurance policy. Consistent
with the foregoing , the Servicer may in its discretion waive or permit to be
waived any fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation and extend the due date for payments due on
a Business Note for a period (with respect to each payment as to which the due
date is extended) not greater than 180 days after the initially scheduled due
date for such payment provided that the Servicer determines such extension would
not be considered a new mortgage loan for federal income tax purposes. In the
event the Servicer shall consent to the deferment of the due dates for payments
due on a Business Note, the Servicer shall nonetheless make payment of any
required Monthly Advance with respect to the payments so extended to the same
extent as if such installment were due, owing and delinquent and had not been
deferred, and shall be entitled to reimbursement therefor in accordance with
Section 4.04(b) hereof.
Section 4.13 Access to Certain Documentation and
------------------------------------
Information Regarding the Business Loans.
----------------------------------------
The Servicer shall provide to the Owner Trustee, the Indenture
Trustee, the FDIC, the OCC, the Federal Reserve, the Office of Thrift
Supervision and the supervisory agents and examiners of the foregoing, access to
the documentation regarding the Business Loans required by applicable local,
state and federal regulations, such access being afforded without charge but
only upon reasonable request and during normal business hours at the offices of
the Servicer designated by it.
30
ARTICLE V
PAYMENTS TO THE CERTIFICATEHOLDERS
----------------------------------
Section 5.01 Establishment of Note Distribution Account; Deposits in
-------------------------------------------------------
Note Distribution Account; Permitted Withdrawals from
-----------------------------------------------------
Note Distribution Account .
-------------------------
(a) No later than the Closing Date, the Indenture Trustee will
establish and maintain with itself in its trust department a trust account,
which shall not be interest-bearing, titled "Note Distribution Account, Marine
Midland Bank, as Indenture Trustee for the registered holders of FNBNE Business
Loan Notes, Series 1998-A" (the " Note Distribution Account"). The Indenture
Trustee shall, promptly upon receipt, deposit in the Note Distribution Account
and retain therein:
(i) the Available Funds (net of the amount of Monthly Advances
and Compensating Interest deposited pursuant to subclause (ii) below);
(ii) the Compensating Interest and the portion of the Monthly
Advance remitted to the Indenture Trustee by the Servicer;
(iii) amounts transferred from the Spread Account pursuant to
Section 5.02(b)(i);
(iv) amounts required to be paid by the Servicer pursuant to
Section 5.06(e) in connection with losses on investments of amounts in
the Accounts; and
(v) amounts transferred from the Pre-Funding Account and the
Capitalized Interest Account on the Special Remittance Date pursuant
to Sections 5.04(c) and (h), respectively.
(b) Amounts on deposit in the Note Distribution Account shall be
withdrawn on each Remittance Date by the Indenture Trustee, or the Paying Agent,
on its behalf, to effect the distribution described in Section 5.07(b) and
thereafter by the following parties in no particular order of priority:
(i) by the Indenture Trustee, to invest amounts on deposit in
the Note Distribution Account in Permitted Instruments pursuant to
Section 5.06;
(ii) by the Indenture Trustee, to pay on a monthly basis to the
Servicer as additional servicing compensation interest paid and
earnings realized on Permitted Instruments;
31
(iii) by the Indenture Trustee, to withdraw any amount not
required to be deposited in the Note Distribution Account or deposited
therein in error; and
(iv) by the Indenture Trustee, to clear and terminate the Note
Distribution Account upon the termination of this Agreement in
accordance with the terms of Section 10.01 hereof.
Section 5.02 Establishment of Spread Account;
--------------------------------
Deposits in Spread Account; Permitted
-------------------------------------
Withdrawals from Spread Account.
-------------------------------
(a) No later than the Closing Date, the Indenture Trustee will
establish and maintain with itself in its trust department a trust account,
which shall not be interest bearing, titled "Spread Account, Marine Midland
Bank, as Indenture Trustee for the registered holders of FNBNE Business Loan
Notes, Series 1998-A" (the "Spread Account"). The Spread Account shall
constitute part of the Trust Fund, and the funds held therein may be invested in
Permitted Instruments. On the Closing Date, the Indenture Trustee will make an
initial cash deposit from the proceeds of the sale of the Class A Notes into the
Spread Account in an amount equal to $4,550,000.00. Thereafter, on each
Remittance Date, the Indenture Trustee shall, promptly upon receipt, deposit
into the Spread Account:
(i) that portion of the Available Funds required to be deposited
into the Spread Account pursuant to Section 5.07(b)(xi) until the
Spread Balance equals the then applicable Specified Spread Account
Requirement; and
(ii) amounts required to be paid by the Servicer pursuant to
Section 5.06(e) in connection with losses on investments of amounts in
the Spread Account.
(b) Amounts on deposit in the Spread Account shall be withdrawn by
Indenture Trustee for distribution in the manner set forth in subclause (c)
below on each Remittance Date in the following order of priority:
(i) to deposit in the Note Distribution Account an amount by
which (a) the sum of (i) the Class A, Class M-1 and Class M-2 Interest
Distribution Amounts, (ii) the Class A, Class M-1 and Class M-2
Principal Distribution Amounts, (iii) the Class M-1 and Class M-2
Carry Forward Interest Amounts and (iv) the Class A, Class M-1 and
Class M-2 Carry Forward Amounts exceeds (b) the Available Funds for
such Remittance Date (but excluding from such definition, amounts in
the Spread Account);
(ii) to deposit in the Note Distribution Account the amount, if
any, required to make the full distribution to the Expense Account
pursuant to Section 5.07(b)(vii); and
32
(iii) to the extent that the amount then on deposit in the Spread
Account after giving effect to all required transfers from the Spread
Account to the Note Distribution Account on such Remittance Date then
exceeds the Specified Spread Account Requirement as of such Remittance
Date (such excess, a "Spread Account Excess"), an amount equal to such
Spread Account Excess shall be distributed first, to make any payments
required pursuant to Section 5.07(b)(xii) -- (xix), in that order,
and then, to the Holders of the Certificates;
and also, in no particular order of priority:
(iv) to invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 5.06;
(v) to withdraw any amount not required to be deposited in
the Spread Account or deposited therein in error; and
(vi) to clear and terminate the Spread Account upon the termination of
this Agreement in accordance with the terms of Section 10.01.
(c) Any amounts which are required to be withdrawn from the Spread
Account pursuant to paragraph (b) above shall be withdrawn from the Spread
Account in the following order of priority: (i) first, from any uninvested
-----
funds therein, and (ii) second, from the proceeds of the liquidation of any
------
investments therein pursuant to Section 5.06(b).
(d) Any amounts which are distributed by the Indenture Trustee to the
holders of the Certificates pursuant to paragraph (b) above will not be required
to be refunded, regardless of whether there are sufficient funds on a Subsequent
Remittance Date to make a full distribution to holders of the Notes on such
Remittance Date.
Section 5.03 Establishment of Expense Account;
---------------------------------
Deposits in Expense Account; Permitted
--------------------------------------
Withdrawals from Expense Account
--------------------------------
(a) No later than the Closing Date, the Indenture Trustee will
establish with itself an account (the "Expense Account"). The Expense Account
shall not constitute part of the Trust Fund and is for the benefit of the
Indenture Trustee and the Owner Trustee to pay their fees and expenses related
to the Trust and, on a subordinate basis, for the benefit of the Servicer as
described in (b)(ii) and (c) below. The Indenture Trustee shall deposit into
the Expense Account:
(i) on each Remittance Date from the amounts on deposit in
the Note Distribution Account an amount equal to one-twelfth of the
Annual Expense Escrow Amount; and
33
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 5.06(e) in connection with losses on investments
of amounts in the Expense Account.
If, at any time the amount then on deposit in the Expense Accounts shall be
insufficient to pay in full the fees and expenses of the Indenture Trustee and
the Owner Trustee then due, the Indenture Trustee and the Owner Trustee shall
make demand on the Servicer to advance the amount of such insufficiency, and the
Servicer shall promptly advance such amount. Thereafter, the Servicer shall be
entitled to reimbursement from the Expense Account for the amount of any such
advance from any excess funds available pursuant to subclause (c)(ii) below.
Without limiting the obligation of the Servicer to advance such insufficiency,
in the event the Servicer does not advance the full amount of such insufficiency
by the Business Day immediately preceding the Determination Date, the amount of
such insufficiency shall be deposited into the Expense Account for payment to
the Indenture Trustee pursuant to Section 5.07(b)(vii), to the extent of
available funds in the Note Distribution Account.
(b) The Indenture Trustee may invest amounts on deposit in the
Expense Accounts in Permitted Instruments pursuant to Section 5.06 hereof, and
the Indenture Trustee shall withdraw amounts on deposit in the Expense Accounts
to:
(i) pay the Indenture Trustee's and Owner Trustee's fees and
expenses as described in Section 2.08 hereof;
(ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on
Permitted Instruments;
(iii) withdraw any amounts not required to be deposited in the
Expense Accounts or deposited therein in error; and
(iv) clear and terminate the Expense Account upon the
termination of this Agreement in accordance with the terms of Section
10.01.
(c) On the twelfth Remittance Date following the Closing Date, and on
each twelfth Remittance Date thereafter, the Indenture Trustee shall determine
that all payments required to be made during the prior twelve month period
pursuant to subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and,
if all such payments have been made, from the amounts remaining in the Expense
Accounts, the Indenture Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Seller, for reimbursable
advances made pursuant to Section 8.01;
(ii) reimburse the Servicer for advances made by it pursuant to
the last paragraph of subclause (a) above; and
34
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in the Expense Account after
payments made pursuant to subclauses (b)(i), (b)(ii), (b)(iii), (c)(i)
and (c)(ii), above.
Section 5.04 Pre-Funding Account and Capitalized
-----------------------------------
Interest Account
----------------
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain in its trust department a trust account, which shall not
be interest-bearing, titled "FNBNE Business Loan Pre-Funding Account 1998-A"
(the "Pre-Funding Account"). The Pre-Funding Account shall constitute part of
the Trust Fund and may only be invested in Permitted Investments. The Indenture
Trustee shall, promptly upon receipt, deposit into the Pre-Funding Account and
retain therein the Original Pre-Funded Amount in an amount equal to the sum of
$13,044,782.35 from the proceeds of the sale of the Class A Notes.
(b) On each Subsequent Transfer Date, the Servicer shall instruct the
Indenture Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Principal Balances of the Subsequent Business Loans sold
to the Trust Fund on such Subsequent Transfer Date and pay such amount to or
upon the order of the Seller with respect to such transfer. In no event shall
the Servicer be permitted to instruct the Indenture Trustee to release from the
Pre-Funding Account in excess of $13,044,782.35.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Indenture Trustee to
withdraw from the Pre-Funding Account on the immediately following Remittance
Date and deposit such amounts in the Note Distribution Account. However, if at
the close of business on the Determination Date in March 1999 amounts still
remain in the Pre-Funding Account, the Servicer shall instruct the Indenture
Trustee to withdraw from the Pre-Funding Account on the Special Remittance Date
and deposit in the Note Distribution Account any Pre-Funded Amount then
remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in January, February and March,
1999, the Indenture Trustee shall transfer from the Pre-Funding Account to the
Note Distribution Account, the Pre-Funding Earnings, if any, applicable to each
such Remittance Date.
(e) No later than the Closing Date, the Indenture Trustee shall
establish and maintain in its trust department a trust account which shall not
be interest-bearing, titled "FNBNE Business Loan Capitalized Interest Account
1998-A" (the " Capitalized Interest Account"). The Capitalized Interest Account
shall constitute part of the Trust Fund and may only be invested in Permitted
Investments. The Indenture Trustee shall, promptly upon receipt, deposit into
the Capitalized Interest Account $127,050.12. If prior to the end of the
Funding Period the funds on deposit in the Pre-Funding Account are invested in a
guaranteed investment contract, repurchase agreement or other arrangement
acceptable to the Rating Agencies, that
35
constitutes a Permitted Instrument, the Indenture Trustee shall, within one
Business Day of its receipt of notification of satisfaction of the Rating Agency
Condition, withdraw from the Capitalized Interest Account and pay to the Seller
the amount set forth in such notification.
(f) On the Remittance Dates occurring in January, February and March,
the Indenture Trustee shall transfer from the Capitalized Interest Account to
the Note Distribution Account, the Capitalized Interest Requirement, if any,
for such Remittance Dates.
(g) On the Special Remittance Date, the Indenture Trustee shall
transfer from the Capitalized Interest Account to the Note Distribution Account
the Capitalized Interest Requirement, if any, for such Special Remittance Date.
Any amounts remaining in the Capitalized Interest Account after taking into
account such transfer shall be paid on such Special Remittance Date to the
Certificateholders, and the Capitalized Interest Account shall be closed.
Section 5.05 [Intentionally Omitted]
Section 5.06 Investment of Accounts.
----------------------
(a) So long as no default or Event of Default shall have occurred and
be continuing, and consistent with any requirements of the Code, all or a
portion of any Account which by the terms of this Agreement shall be invested in
Permitted Instruments by the Indenture Trustee, as directed in writing by the
Servicer, in one or more Permitted Instruments in the name of the Indenture
Trustee, bearing interest or sold at a discount. No such investment in the
Principal and Interest Account, Note Distribution Account, the Pre-Funding
Account, the Capitalized Interest Account and the Spread Account shall mature
later than the Business Day immediately preceding the next Remittance Date and
no such investment in the Expense Account shall mature later than the Business
Day immediately preceding the date such funds will be needed to pay fees or
premiums; provided, however, the Indenture Trustee or any affiliate thereof, may
-------- -------
be the obligor on any investment which otherwise qualifies as a Permitted
Instrument and any investment on which the Indenture Trustee is the obligor may
mature on such Remittance Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account held
by the Indenture Trustee and sufficient uninvested funds are not available to
make such disbursement, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account. The Indenture Trustee shall not be liable for any investment loss or
other charge resulting therefrom.
(c) The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Indenture Trustee is the obligor thereon).
36
(d) The Indenture Trustee shall invest and reinvest funds in the
Accounts held by the Indenture Trustee to the fullest extent practicable, in
such manner as the Servicer shall from time to time direct in writing, but only
in one or more Permitted Instruments.
(e) All income or other gain from investments in any Account held by
the Indenture Trustee shall be deposited in such Account, immediately on
receipt, and the Indenture Trustee shall notify the Servicer of any loss
resulting from such investments. The Servicer shall remit the amount of any
such loss from its own funds, without reimbursement therefor, to the Indenture
Trustee for deposit in the Account from which the related funds were withdrawn
for investment by the next Determination Date following receipt by the Servicer
of such notice.
Section 5.07 Distributions.
-------------
(a) The rights of the Noteholders and Certificateholders to receive
distributions from the proceeds of the Trust Fund, and all ownership interests
of the Certificateholders in such distributions, shall be as set forth in this
Agreement.
(b) On each Remittance Date the Indenture Trustee shall withdraw
from the Note Distribution Account an amount equal to (A) that portion of the
Available Funds received from the Servicer pursuant to Section 5.01(a)(i), (ii),
(iv) and (v), (B) the amounts deposited therein pursuant to Section 5.02(b)(i)
and make distributions thereof in the following order of priority:
(i) first, to the Class A Noteholders, in an amount up to the Class
A Interest Distribution Amount;
(ii) second, to the Class M-1 Noteholders, in an amount up to the
Class M-1 Interest Distribution Amount, minus the Class Carry Forward Interest
Amount for the Class M-1 Notes;
(iii) third, to the Class M-2 Noteholders, in an amount up to the
Class M-2 Interest Distribution Amount, minus the Class Carry Forward Interest
Amount for the Class M-2 Notes;
(iv) fourth, to the Class A Noteholders, in an amount up to the sum
of (a) the Class A Principal Distribution Amount for the Class A Notes and (b)
the Class Carry Forward Amount for the Class A Notes;
(v) fifth, to the Class M-1 Noteholders, in an amount up to the sum
of (a) the Class M-1 Principal Distribution Amount for the Class M-1 Notes and
(b) the Class Carry Forward Amount for the Class M-1 Notes;
37
(vi) sixth, to the Class M-2 Noteholders, in an amount up to the
sum of (a) the Class M-2 Principal Distribution Amount for the Class M-2 Notes
and (b) the Class Carry Forward Amount for the Class M-2 Notes;
(vii) seventh, to the Expense Account in an amount up to one-twelfth
of the Annual Expense Escrow Amount plus any amount required to be paid to the
Owner Trustee and the Indenture Trustee pursuant to this Agreement;
(viii) eighth, to the Class M-1 Noteholders, the Class Carry Forward
Interest Amount for the Class M-1 Notes;
(ix) ninth, to the Class M-2 Noteholders, the Class Carry Forward
Interest Amount for the Class M-2 Notes;
(x) tenth, to the Servicer, certain amounts reimbursable pursuant
to the Sale and Servicing Agreement;
(xi) eleventh, to the Spread Account, unless and until the amount
therein equals the Specified Spread Account Requirement;
(xii) twelfth, to the Class A Noteholders, any Interest Carryover
for the Class A Notes;
(xiii) thirteenth, to the Class M-1 Noteholders, any Interest
Carryover for the Class M-1 Notes;
(xiv) fourteenth, to the Class M-2 Noteholders, any Interest
Carryover for the Class M-2 Notes;
(xv) fifteenth, to the Class B Noteholders, in an amount up to the
Class B Interest Distribution Amount, minus the Class Carry Forward Interest
Amount for the Class B Notes;
(xvi) sixteenth, to the Class B Noteholders, in an amount up to the
Class B Principal Distribution Amount for the Class B Notes;
(xvii) seventeenth, to the Class B Noteholders, the Class Carry
Forward Interest Amount for the Class B Notes;
(xviii) eighteenth, to the Class B Noteholders, the Class Carry
Forward Amount for the Class B Notes;
(xix) nineteenth, to the Class B Noteholders, any Interest Carryover
for the Class B Notes; and
38
(xx) twentieth, to the Owner Trustee, for Distribution to the
Certificateholders, any excess.
Additionally, on the Special Remittance Date, the Indenture Trustee
shall withdraw from the Note Distribution Account the amount, if any, deposited
therein pursuant to Section 5.01(a)(v) and make distributions thereof to
Noteholders as follows: (i) from amounts transferred from the Pre-Funding
Account, distributions of principal to the Notes of each Class pro rata based
upon the applicable Class A, Class M-1, Class M-2 and Class B Percentages and
(ii) from amounts transferred from the Capitalized Interest Account,
distributions of interest to the Holders of each Class of Notes equal to the
Capitalized Interest Requirement.
(c) All distributions made to the Noteholders of a particular Class
will be made on a pro rata basis among the Noteholders of record of the
applicable Class on the next preceding Record Date based on the Percentage
Interest represented by their respective Notes, and shall be made by check or,
upon request by a Noteholders, by wire transfer of immediately available funds
to the account of such Noteholders at a bank or other entity having appropriate
facilities therefor, and, in the case of wire transfers, at the expense of such
Noteholder unless such Noteholder shall own of record Notes which have initial
principal balances aggregating at least $1,000,000.
Section 5.08 [Intentionally Omitted].
---------------------
Section 5.09 Statements.
----------
Each month, not later than 12:00 noon New York time on the
Determination Date, the Servicer shall deliver to the Indenture Trustee, by
telecopy, for distribution to the Noteholders, the receipt and legibility of
which shall be confirmed telephonically, with hard copy thereof and the
Servicer's Monthly Computer Tape in the form attached hereto as Exhibit L (both
in hard copy and in computer tape form) to be delivered on the Business Day
following the Determination Date, a certificate signed by a Servicing Officer (a
"Servicer's Certificate") stating the date (day, month and year), the Series
number of the Notes, the date of this Agreement, and, as of the close of
business on the Record Date for such month:
(i) Available Funds for the related Remittance Date;
(ii) The Aggregate Class A Note Principal Balance, the Aggregate
Class M-1 Note Principal Balance, the Aggregate Class M-2 Note Principal
Balance, and the Aggregate Class B Note Principal Balance as reported in the
prior Servicer's Certificate pursuant to subclause (xi) below, or, in the case
of the first Determination Date, the Original Class A, Class M-1, Class M-2, and
Class B Note Principal Balance;
(iii) The number and Principal Balances of all Business Loans which
were the subject of Principal Prepayments during the Due Period and the number
and Principal Balances of all Defaulted Business Loans purchased by the Servicer
during the Due Period;
39
(iv) The amount of all Curtailments which were received during the
Due Period;
(v) The amount of all Excess Payments and the amount of all Monthly
Payments in respect of principal received during the Due Period;
(vi) The aggregate amount of interest received on Business Loans;
(vii) The amount of the Monthly Advances to be made on the
Determination Date and the Compensating Interest payment to be made on the
Determination Date;
(viii) The delinquency and foreclosure information set forth in the
form attached hereto as Exhibit K;
(ix) The Interest Distribution Amounts and Principal Distribution
Amounts for each Class for the Remittance Date with the components thereof
stated separately;
(x) The amount available in the Spread Account as of the related
Record Date in cash and from liquidation of Permitted Instruments and the
amount, if any, to be transferred from the Spread Account to the Note
Distribution Account pursuant to Section 5.02(b)(i);
(xi) The Aggregate Class A Note Principal Balance, Aggregate
Class M-1 Note Principal Balance, Aggregate Class M-2 Note Principal Balance and
Aggregate Class B Note Principal Balance after giving effect to the distribution
to be made on the Remittance Date;
(xii) The weighted average maturity and weighted average Business
Loan Interest Rate;
(xiii) The Servicing Fees and amounts to be deposited to the Expense
Account;
(xiv) The amount of all payments and reimbursements to the Servicer;
(xv) The Class A, Class M-1, Class M-2 and Class B Remittance Rates
with respect to such Remittance Date;
(xvi) During the Funding Period, the aggregate Principal Balance of
the Subsequent Business Loans purchased during the prior Due Period and the
amount on deposit in the Pre-Funding Account as of the end of such Due Period;
(xvii) The Net Interest Cap with respect to the Remittance Date;
40
(xviii) If the Class Remittance Rate for a Class of Notes for such
Remittance Date is based on the Net Interest Cap, the amount of any Interest
Carryover for such Class of Notes for such Remittance Date;
(xix) the amount of the distribution, if any, allocable to
Interest Carryover and the amount of any Interest Carryover for all prior
Remittance Dates after giving effect to such distribution (in each case, stated
separately by Class and in the aggregate); and
(xx) Such other information as the Indenture Trustee, the
Noteholders and the Certificateholders or the Rating Agencies may reasonably
require.
The Indenture Trustee shall forward such report to the Noteholders,
the Certificateholders, the Owner Trustee and the Rating Agencies on the
Remittance Date, together with a separate report indicating the amount of funds
deposited in each Note Distribution Account pursuant to Section 5.01(a)(iv); and
the amounts which are reimbursable to the Servicer or the Seller pursuant to
Sections 5.03(c)(i), 5.03(c)(ii) and 5.07(b)(x) (all reports prepared by the
Indenture Trustee of such withdrawals and deposits will be based in whole or in
part upon the information provided to the Indenture Trustee by the Servicer).
To the extent that there are inconsistencies between the telecopy of
the Servicer's Certificate and the hard copy thereof, the Indenture Trustee
shall be entitled to rely upon the telecopy. In the case of information
furnished pursuant to subclauses (ii), (iii), (iv), (v), (ix) and (xi), above,
the amounts shall be expressed in a separate section of the report as a dollar
amount for each Class per $1,000 original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Indenture Trustee
shall, based upon information received from the Servicer, forward to the
Noteholders, the Owner Trustee and the Rating Agencies a report setting forth
the amount of principal and interest, if any, being paid to each Class of Notes
on the Special Remittance Date.
(a) Within a reasonable period of time after the end of each calendar
year, the Servicer shall furnish to the Indenture Trustee and the Owner Trustee
for distribution to each Person who at any time during the calendar year was a
Noteholder or a Certificateholder such information as is reasonably necessary to
provide to such Person a statement containing the information set forth in
subclauses (vi), (ix), and (xiv), above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Noteholder or a
Certificateholder. Such obligation of the Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer pursuant to any requirements of the Code as from time
to time are in force.
(b) Upon reasonable advance notice in writing, the Servicer will
provide to each Noteholder or Certificateholder which is a savings and loan
association, bank or insurance company certain reports and access to information
and documentation regarding the Business Loans sufficient to permit such
Noteholder or Certificateholder to comply with applicable
41
regulations of the Office of Thrift Supervision or other regulatory authorities
with respect to investment in the Notes or Certificates, as applicable.
(c) The Servicer shall furnish to each Noteholder and
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Noteholder and
Certificateholder or otherwise with respect to the purposes of this Agreement,
all such reports or information to be provided by and in accordance with such
applicable instructions and directions as the Noteholder and Certificateholder
may reasonably require; provided, that the Servicer shall be entitled to be
reimbursed by such Noteholder or Certificateholder for the Servicer's actual
expenses incurred in providing such reports if such reports are not producable
in the ordinary course of the Servicer's business. The Rating Agencies shall
receive copies of any such reports or information furnished to the Noteholders
and Certificateholders.
Section 5.10 Advances by the Servicer.
------------------------
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Indenture Trustee for deposit in the Note
Distribution Account an amount (as indicated in the Servicer's Certificate
prepared pursuant to Section 5.09), to be distributed on the related Remittance
Date pursuant to Section 5.07, equal to the amount by which (i) 30 days'
interest at a rate equal to the then applicable Adjusted Business Loan
Remittance Rate on the Aggregate Class A, Class M-1, Class M-2 and Class B Note
Principal Balances immediately prior to the related Remittance Date exceeds (ii)
the amount received by the Servicer as of the related Record Date in respect of
interest on the Business Loans (plus, for the Remittance Dates during the
Funding Period, the sum of (i) all funds to be transferred to the Note
Distribution Account from the Capitalized Interest Account for such Remittance
Date pursuant to Section 5.04(g) and (ii) the Pre-Funding Earnings for the
applicable Remittance Date), such excess being defined herein as the "Monthly
Advance." The Servicer may reimburse itself for Monthly Advances made pursuant
to Section 4.04. Notwithstanding the foregoing, the Servicer shall not be
required to make a Monthly Advance with respect to a Business Loan if it
determines, in good faith, that such advance would be nonrecoverable from
amounts received in respect of the Business Loans.
Section 5.11 Compensating Interest.
---------------------
Each Class of Notes shall be entitled to a full month's interest on
the principal portion of each Business Loan at the then applicable Class A,
Class M-1, Class M-2 or Class B Remittance Rate for such Class, as the case may
be. Not later than the close of business on each Determination Date, with
respect to each Business Loan for which a Principal Prepayment or Curtailment
was received during the related Due Period, the Servicer shall remit to the
Indenture Trustee for deposit in the Note Distribution Account from amounts
otherwise payable to it as servicing compensation, an amount (such amount
required to be delivered to the Indenture Trustee is referred to herein as
"Compensating Interest") (as indicated in the Servicer's Certificate prepared
pursuant to Section 5.09) equal to the difference between (a) 30 days' interest
at the
42
Adjusted Business Loan Remittance Rate on the Principal Balance of each related
Business Loan as of the beginning of the Due Period applicable to the Remittance
Date on which such amount will be distributed, and (b) the amount of interest
actually received on each such Business Loan for such Due Period net of the
Servicing Fee, and the fees and expenses of the Owner Trsutee and the Indenture
Trustee allocable to such interest.
Section 5.12 Reports of Foreclosure and Abandonment of Mortgaged
---------------------------------------------------
Property
--------
Each year the Servicer shall make the reports of foreclosures and
abandonment of any Mortgaged Property required by Section 6050J of the Code.
Promptly after filing each such report with the Internal Revenue Service, the
Servicer shall provide the Indenture Trustee with an Officer's Certificate
certifying that such report has been filed.
43
ARTICLE VI
GENERAL SERVICING PROCEDURE
---------------------------
Section 6.01 [Intentionally Omitted]
Section 6.02 Satisfaction of Mortgages and Collateral and Release of
-------------------------------------------------------
Business Files
--------------
The Servicer shall maintain the Fidelity Bond as provided for in
Section 4.09 insuring the Servicer against any loss it may sustain with respect
to any Business Loan not satisfied in accordance with the procedures set forth
herein.
Upon the payment in full of any Business Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Indenture
Trustee by a certification in the form of Exhibit I attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Principal and Interest Account pursuant to Section 4.03 have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Indenture Trustee's Document File. Upon receipt of such
certification and request, the Indenture Trustee shall release, within 3
Business Days, the related Indenture Trustee's Document File to the Servicer.
Expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be payable only from and to the extent of servicing
compensation and shall not be chargeable to the Principal and Interest Account
or the Note Distribution Account.
From time to time and as appropriate for the servicing or foreclosure
of any Business Loan, the Indenture Trustee shall, upon request of the Servicer
and delivery to the Indenture Trustee of a certification in the form of Exhibit
I attached hereto signed by a Servicing Officer, release the related Indenture
Trustee's Document File to the Servicer within 3 Business Days, and the
Indenture Trustee shall execute such documents as shall be necessary to the
prosecution of any such proceedings. Such servicing receipt shall obligate the
Servicer to return the Indenture Trustee's Document File to the Indenture
Trustee when the need therefor by the Servicer no longer exists, unless the
Business Loan has been liquidated and the Liquidation Proceeds relating to the
Business Loan have been deposited in the Principal and Interest Account and
remitted to the Indenture Trustee for deposit in the Note Distribution Account
or the Business File or such document has been delivered to an attorney, or to a
public Indenture Trustee or other public official as required by law, for
purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property or other Collateral either judicially or
non-judicially, and the Servicer has delivered to the Indenture Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Business File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Business Loan was liquidated, the servicing
receipt shall be released by the Indenture Trustee to the Servicer.
44
The Indenture Trustee shall execute and deliver to the Servicer any
court pleadings, requests for Indenture Trustee's sale or other documents
necessary to the foreclosure or Indenture Trustee's sale in respect of a
Mortgaged Property or other Collateral or to any legal action brought to obtain
judgment against any Obligor on the Business Note or Mortgage or other agreement
securing Collateral or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Business Note or Mortgage or other agreement
securing Collateral or otherwise available at law or in equity. Together with
such documents or pleadings, the Servicer shall deliver to the Indenture Trustee
a certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Indenture Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Indenture Trustee will not invalidate or otherwise affect the lien of the
Mortgage or other agreement securing Collateral, except for the termination of
such a lien upon completion of the foreclosure or Indenture Trustee's sale. The
Indenture Trustee shall, upon receipt of a written request from a Servicing
Officer, execute any document provided to the Indenture Trustee by the Servicer
or take any other action requested in such request, that is, in the opinion of
the Servicer as evidenced by such request, required by any state or other
jurisdiction to discharge the lien of a Mortgage or other agreement securing
Collateral upon the satisfaction thereof and the Indenture Trustee will sign and
post, but will not guarantee receipt of, any such documents to the Servicer, or
such other party as the Servicer may direct, within five Business Days of the
Indenture Trustee's receipt of such certificate or documents. Such certificate
or documents shall establish to the Indenture Trustee's satisfaction that the
related Business Loan has been paid in full by or on behalf of the Obligor and
that such payment has been deposited in the Principal and Interest Account.
Section 6.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Principal and Interest Account or to retain from
interest payments on the Business Loans the Servicer's Servicing Fee; provided,
however, that the Servicer only may withdraw from the Principal and Interest
Account the Servicer's Servicing Fee related to the Business Loan for which
Servicing Fee was received. Additional servicing compensation in the form of
assumption and other administrative fees, prepayment penalties, interest paid on
funds on deposit in the Principal and Interest Account, interest paid and
earnings realized on Permitted Instruments and amounts remitted pursuant to
Section 5.03(c)(iii) shall be retained by or remitted to the Servicer to the
extent not required to be remitted to the Indenture Trustee for deposit in the
Note Distribution Account. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided for
herein.
Section 6.04 Annual Statement as to Compliance.
---------------------------------
The Servicer will deliver to the Indenture Trustee, the Rating
Agencies and the Owner Trustee on or before March 31 of each year beginning
March 31, 2000, an Officer's
45
Certificate stating that (i) the Servicer has fully complied with the provisions
of Articles IV, V, VI and VII, (ii) a review of the activities of the Servicer
during the preceding calendar year and of performance under this Agreement has
been made under such officers' supervision, and (iii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof including the steps
being taken by the Servicer to remedy such default.
Section 6.05 Annual Independent Public Accountants' Servicing
------------------------------------------------
Report
------
On or before March 31 of each year beginning March 31, 2000, the
Servicer, at its expense, shall cause a firm of nationally recognized
independent public accountants reasonably acceptable to the Indenture Trustee to
furnish a letter or letters to the Indenture Trustee, the Owner Trustee and the
Rating Agencies to the effect that such firm has with respect to the Servicer's
overall servicing operations examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 6.06 Indenture Trustee's and Owner Trustee's Right to
------------------------------------------------
Examine Servicer Records and Audit Operations
---------------------------------------------
The Indenture Trustee, the Owner Trustee and the Rating Agencies shall
have the right upon reasonable prior notice, during normal business hours and as
often as reasonably required, to examine and audit any and all of the books,
records or other information of the Servicer, whether held by the Servicer or by
another on behalf of the Servicer, which may be relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement. No amounts payable in respect of the foregoing shall be paid from
the Trust Fund.
Section 6.07 Reports to the Indenture Trustee; Principal and
-----------------------------------------------
Interest Account Statements.
---------------------------
Not later than 20 days after each Record Date, the Servicer shall
forward to the Indenture Trustee a statement, certified by a Servicing Officer,
setting forth the status of the Principal and Interest Account as of the close
of business on the preceding Record Date and showing, for the period covered by
such statement, the aggregate of deposits into the Principal and Interest
Account for each category of deposit specified in Section 4.03, the aggregate of
withdrawals from the Principal and Interest Account for each category of
withdrawal specified in Section 4.04, the aggregate amount of permitted
withdrawals not made in the related Due Period, and the amount of any Monthly
Advances or payments of Compensating Interest, in each case, for the related Due
Period.
46
ARTICLE VII
REPORTS TO BE PROVIDED BY SERVICER
----------------------------------
Section 7.01 Financial Statements.
--------------------
The Servicer understands that, in connection with the transfer of the
Notes and the Certificates, Noteholders and Certificateholders may request that
the Servicer make available to prospective Noteholders and Certificateholders
the annual audited financial statements of the Servicer's parent (First
International Bancorp, Inc. and any successor thereto) for one or more of the
most recently completed five fiscal years for which such statements are publicly
available, which request shall not be unreasonably denied. Such audited
financial statements shall also be provided to the Rating Agencies by the
Servicer upon request.
The Servicer also agrees to make available on a reasonable basis to
any prospective Noteholder a knowledgeable financial or accounting officer for
the purpose of answering reasonable questions respecting recent developments
affecting the Servicer or the financial statements of the Servicer and its
parent (First International Bancorp, Inc. and any successor thereto) and to
permit any prospective Noteholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying such prospective
Noteholder that the Servicer has the ability to service the Business Loans in
accordance with this Agreement.
47
ARTICLE VIII
THE SERVICER
------------
Section 8.01 Indemnification; Third Party Claims.
-----------------------------------
(a) The Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee, and each Noteholder and Certificateholder harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Indenture Trustee, the Owner Trustee, and any Noteholder or Certificateholder
may sustain in any way related to the failure of the Servicer to perform its
duties and service the Business Loans in compliance with the terms of this
Agreement. The Servicer shall immediately notify the Indenture Trustee and the
Owner Trustee if a claim is made by any party with respect to this Agreement,
and the Servicer shall assume (with the consent of the Indenture Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the Indenture
Trustee, the Owner Trustee, and/or a Noteholder or Certificateholder in respect
of such claim. The Indenture Trustee may reimburse the Servicer from the
Expense Account pursuant to Section 5.03(c)(i) for all amounts advanced by it
pursuant to the preceding sentence except when the claim relates directly to the
failure of the Servicer to service and administer the Business Loans in
compliance with the terms of this Agreement.
(b) The Seller agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and each Noteholder and Certificateholder harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, and any Noteholder or Certificateholder may sustain
in any way related to the failure of the Seller to perform its duties in
compliance with the terms of this Agreement and in the best interests of the
Noteholders and Certificateholders. The Seller shall immediately notify the
Indenture Trustee and the Owner Trustee, if a claim is made by a third party
with respect to this Agreement, and the Seller shall assume (with the consent of
the Indenture Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Seller, the Indenture Trustee, the Owner Trustee and/or a
Noteholder or Certificateholder in respect of such claim. The Indenture Trustee
may reimburse the Seller from the Expense Account pursuant to Section 5.03(c)(i)
for all amounts advanced by it pursuant to the preceding sentence except when
the claim relates directly to the Seller indemnification pursuant to Section
2.05 and Section 3.03 or to the failure of the Servicer, if it is an affiliate
of the Seller, to perform its obligations to service and administer the Business
Loans in compliance with the terms of this Agreement, or the failure of the
Seller to perform its duties in compliance with the terms of this Agreement and
in the best interests of the Noteholders and Certificateholders.
48
Section 8.02 Merger or Consolidation of the Servicer.
---------------------------------------
The Servicer will keep in full effect its existence, rights and
franchises as a corporation, bank or association and if required by applicable
law will obtain and preserve its qualification to do business as a foreign
entity, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Business Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an established mortgage loan servicing institution that has a
net worth of at least $15,000,000, and shall be the successor of the Servicer,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Servicer shall send notice of any such merger or
consolidation to the Indenture Trustee and the Rating Agency.
Subject to the satisfaction of the Rating Agency Condition, the
Servicer is permitted to assign its rights and duties hereunder to, and such
rights and duties can be assumed by, an affiliate of the Servicer having a net
worth of at least $15,000,000 (the "Assignee") (in which case all of the
provisions of this Agreement shall, to the same extent as they apply to the
Servicer hereunder, apply to the Assignee rather than the Servicer), without the
execution or filing of any paper or any further act on the part of any parties
hereto, anything herein to the contrary notwithstanding. The Servicer shall send
notice of any such assignment to the Indenture Trustee, the Owner Trustee, and
the Rating Agencies.
Section 8.03 Limitation on Liability of the Servicer and Others.
--------------------------------------------------
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
Section 8.01 herein, the Servicer shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Business Loans in accordance with this Agreement.
Section 8.04 Servicer Not to Resign.
----------------------
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except (i) by mutual consent of the
Servicer, the Indenture Trustee, the Owner Trustee and the Majority Noteholders,
or (ii) in connection with a merger, conversion or consolidation permitted
pursuant to Section 8.02 and upon satisfaction of the Rating Agency Condition
(in which case the Person resulting from the merger, conversion or consolidation
shall
49
be the successor of the Servicer), or (iii) in connection with an assignment
permitted pursuant to Section 8.02 and upon satisfaction of the Rating Agency
Condition (in which case the Assignee shall be the successor of the Servicer) or
(iv) upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law or administrative determination and such
incapacity cannot be cured by the Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by a written Opinion of
Counsel (who may be counsel for the Servicer) to such effect delivered to the
Indenture Trustee and the Owner Trustee, which Opinion of Counsel shall be in
form and substance acceptable to the Indenture Trustee and the Owner Trustee. No
such resignation shall become effective until a successor has assumed the
Servicer's responsibilities and obligations hereunder in accordance with Section
9.02.
50
ARTICLE IX
SERVICER TERMINATION
--------------------
Section 9.01 Servicer Termination Events.
---------------------------
(a) In case one or more of the following events (each a "Servicer
Termination Event") by the Servicer shall occur and be continuing, that is to
say:
(i) (A) the failure by the Servicer to make any required
Servicing Advance, to the extent such failure materially and adversely
affects the interests of the Noteholders; (B) the failure by the
Servicer to make any required Monthly Advance to the extent such
failure materially and adversely affects the interests of the
Noteholders; (C) the failure by the Servicer to remit any Compensating
Interest to the extent such failure materially and adversely affects
the interests of the Noteholders; or (D) any failure by the Servicer
to remit to Noteholders, or to the Indenture Trustee for the benefit
of the Noteholders, or to the Owner Trustee for the benefit of the
Certificateholders, any payment required to be made under the terms of
this Agreement which continues unremedied after the date upon which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Indenture Trustee or to
the Servicer and the Indenture Trustee by any Noteholder or
Certificateholder; or
(ii) failure by the Servicer or the Seller duly to observe or
perform, in any material respect, any other covenants, obligations or
agreements of the Servicer or the Seller as set forth in this
Agreement, which failure continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer or the
Seller, as the case may be, by the Indenture Trustee or to the
Servicer, or the Seller, as the case may be, and the Indenture Trustee
by any Noteholder or Certificateholder; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of the Servicer's property; or
51
(v) the Servicer shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations;
(b) then, and in each and every such case, so long as a Servicer
Termination Event shall not have been remedied, and in the case of clause (i)
above (except for clause (i)(B)), if such Servicer Termination Event shall not
have been remedied within 30 days after the Servicer has received notice of such
Servicer Termination Event, (x) with respect solely to clause (i)(B) above, if
such Monthly Advance is not made earlier than 4:00 p.m. New York time on the
Determination Date, the Indenture Trustee shall give immediate telephonic notice
of such failure to a Servicing Officer of the Servicer and, unless such failure
is cured, either by receipt of payment or receipt of evidence (e.g., a wire
----
reference number communicated by the sending bank) that such funds have been
sent, by 12:00 Noon New York time on the following Business Day, the Indenture
Trustee shall immediately assume, pursuant to Section 9.02 hereof, the duties of
a successor Servicer; and (y) in the case of clauses (i)(A), (i)(C), (i)(D),
(iii), (iv) and (v), the Majority Noteholders, by notice in writing to the
Servicer (except with respect to (iii), (iv) and (v) for which no notice is
required) may, in addition to whatever rights such Noteholders may have at law
or equity including damages, injunctive relief and specific performance, in each
case immediately terminate all the rights and obligations of the Servicer under
this Agreement and in and to the Business Loans and the proceeds thereof, as
Servicer. Upon such receipt by the Servicer of a second written notice from the
Majority Noteholders stating that they or it intend to terminate the Servicer as
a result of such Servicer Termination Event, all authority and power of the
Servicer under this Agreement, whether with respect to the Business Loans or
otherwise, shall, subject to Section 9.02, pass to and be vested in the
Indenture Trustee and the Indenture Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Business Loans and related documents. The
Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Indenture Trustee for administration by
it of all amounts which shall at the time be credited by the Servicer to each
Principal and Interest Account or thereafter received with respect to the
Business Loans.
Section 9.02 Indenture Trustee to Act; Appointment of Successor
--------------------------------------------------
On and after the time of the Servicer's immediate termination, or the
Servicer's receipt of notice if required by Section 9.01, or at any time if the
Indenture Trustee receives the resignation of the Servicer evidenced by an
Opinion of Counsel pursuant to Section 8.04 or the Servicer is removed as
Servicer pursuant to this Article IX, the Indenture Trustee shall be the
successor in all respects to the Servicer in its capacity as Servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties
52
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof; provided, however, that the Indenture Trustee shall not be
liable for any actions of any Servicer prior to it, and that the Indenture
Trustee shall not be obligated to make advances or payments pursuant to Sections
4.03, 4.10, 5.03, 5.10 or 5.11 but only to the extent the Indenture Trustee
determines reasonably and in good faith that such advances would not be
recoverable, such determination to be evidenced with respect to each such
advance by a certification of a Responsible Officer of the Indenture Trustee. As
compensation therefor, the Indenture Trustee shall be entitled to all funds
relating to the Business Loans which the Servicer would have been entitled to
receive from the Principal and Interest Account pursuant to Section 4.04 if the
Servicer had continued to act as Servicer hereunder, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 5.01 and 5.03.
Notwithstanding the above, the Indenture Trustee shall, if it is
unable to so act, appoint, or petition a court of competent jurisdiction to
appoint, any established servicing institution acceptable to the Rating Agencies
that has a net worth of not less than $15,000,000, as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Any collections received by
the Servicer after removal or resignation shall be endorsed by it to the
Indenture Trustee and remitted directly to the Indenture Trustee or, at the
direction of the Indenture Trustee, to the successor servicer. The compensation
of any successor servicer (including, without limitation, the Indenture Trustee)
so appointed shall be the aggregate Servicing Fees and other servicing
compensation in the form of assumption fees, late payment charges or otherwise.
In the event the Indenture Trustee is required to solicit bids as provided
herein, the Indenture Trustee shall solicit, by public announcement, bids from
banks and mortgage servicing institutions meeting the qualifications set forth
above. Such public announcement shall specify that the successor servicer shall
be entitled to the full amount of the aggregate Servicing Fees as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after
any such public announcement, the Indenture Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Indenture Trustee shall deduct from any sum received by the Indenture Trustee
from the successor to the Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder
and the amount of any unreimbursed Servicing Advances and Monthly Advances.
After such deductions, the remainder of such sum shall be paid by the Indenture
Trustee to the Servicer at the time of such sale, transfer and assignment to the
Servicer's successor. The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Servicer agrees to cooperate with the Indenture Trustee
and any successor servicer in effecting the termination of the Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Indenture Trustee or such successor servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Indenture Trustee or
such successor servicer, as applicable, all amounts which then have been or
should have been
53
deposited in the Principal and Interest Account or Spread Account by the
Servicer or which are thereafter received with respect to the Business Loans.
Neither the Indenture Trustee nor any other successor servicer shall be held
liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until written notice of such proposed appointment
shall have been provided by the Indenture Trustee to each Noteholder and
Certificateholder and the Indenture Trustee shall have consented thereto. The
Indenture Trustee shall not resign as servicer until a successor servicer has
been appointed.
Pending appointment of a successor to the Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor out of payments on
Business Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer pursuant to
Section 5.03 or otherwise as provided in this Agreement. The Servicer, the
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 9.03 Waiver of Defaults.
------------------
The Majority Noteholders may, and subject to satisfaction of the
Rating Agency Condition, waive any events permitting removal of the Servicer
pursuant to this Article IX; provided, however, that the Majority Noteholders
may not waive a default in making a required distribution on a Note without the
consent of the holder of such Note. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived.
Section 9.04. Control by Majority Noteholders.
-------------------------------
The Majority Noteholders may direct the time, method and place of
conducting any proceeding relating to the Trust or the Notes or for any remedy
available to the Indenture Trustee or the Owner Trustee with respect to the
Trust or exercising any trust or power conferred on the Indenture Trustee or the
Owner Trustee with respect to the Trust provided that:
-------- ----
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Indenture Trustee shall have been provided with
indemnity satisfactory to it; and
54
(iii) the Indenture Trustee or the Owner Trustee may take any
other action deemed proper by the Indenture Trustee or the Owner
Trustee which is not inconsistent with such direction; provided,
--------
however, that the Indenture Trustee or the Owner Trustee, as the case
-------
may be, need not take any action which it determines might involve it
in liability or may be unjustly prejudicial to the Holders not so
directing.
55
ARTICLE X
TERMINATION
-----------
Section 10.01 Termination.
-----------
This Agreement shall terminate upon notice to the Indenture Trustee of
the earlier of the following events: (a) the final payment or other liquidation
of the last Business Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Business Loan and the
remittance of all funds due thereunder, or (b) mutual consent of the Servicer
and all Noteholders and Certificateholders in writing; provided, however, that
in no event shall this Agreement terminate later than twenty-one years after the
death of the last surviving lineal descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, late
Ambassador of the United States to the Court of St. ▇▇▇▇▇, alive as of the date
hereof.
The Servicer may, at its option, terminate this Agreement on any date
on which the Pool Principal Balance is less than 5% of the sum of (i) the
Original Pool Principal Balance and (ii) the Original Pre-Funded Amount by
purchasing, on the next succeeding Remittance Date, all of the Business Loans
and Foreclosed Properties at a price equal to the sum of (i) 100% of the then
outstanding Aggregate Class A, Aggregate Class M-1, Aggregate Class M-2 and
Aggregate Class B Note Principal Balances, and (ii) 30 days' interest thereon at
the then applicable weighted average Class A, Class M-1, Class M-2 and Class B
Remittance Rates, as the case may be (the "Termination Price"). Notwithstanding
the prior sentence, if at the time the Servicer determines to exercise such
option the unsecured long-term debt obligations of the Servicer are not rated at
least Baa3 by Moody's, if the Rating Agencies are still rating the Notes, the
Servicer shall give the Rating Agencies prior written notice of the Servicer's
determination to exercise such option and shall not exercise such option,
without the consent of the Rating Agencies, prior to furnishing the Rating
Agencies with an Opinion of Counsel, in form and substance reasonably
satisfactory to the Rating Agencies, that the exercise of such option would not
be deemed a fraudulent conveyance by the Servicer.
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and that the Noteholders shall surrender their
Notes to the Indenture Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to Noteholders
mailed during the month of such final distribution before the Determination Date
in such month, specifying (i) the Remittance Date upon which final payment of
the Notes will be made upon presentation and surrender of Notes at the office of
the Indenture Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Remittance
Date is not applicable, payments being made only upon presentation and surrender
of the Notes at the office of the Indenture Trustee therein specified. The
Servicer shall give such notice to the Indenture Trustee therein specified. The
Servicer shall give such notice to the Indenture Trustee and the Rating Agencies
at the time such notice is given to Noteholders. Any obligation of the Servicer
to pay amounts due to the Indenture Trustee shall survive the termination of
this Agreement.
56
Section 10.02 Accounting Upon Termination of Servicer
---------------------------------------
Upon termination of the Servicer under Article IX hereof, the Servicer
shall:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee the funds in any Principal and Interest
Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee all Business Files and related documents and
statements held by it hereunder and a Business Loan portfolio computer diskette;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee and, upon request, to the Noteholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Business Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Business Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement.
57
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
Section 11.01 Acts of Noteholders.
-------------------
Except as otherwise specifically provided herein, whenever Noteholder
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Noteholders if the Majority Noteholders agree to
take such action or give such consent or approval.
Section 11.02 Amendment.
---------
(a) This Agreement may be amended from time to time by the Servicer
and the Owner Trustee with the consent of the Indenture Trustee (which consent
may not be unreasonably withheld), without notice to or consent of the
Noteholders or Certificateholders, to cure any ambiguity, to correct or
supplement any provisions herein, to comply with any changes in the Code, or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Indenture Trustee, adversely affect the
interests of any Noteholder or Certificateholder or any other party and further
provided that no such amendment shall reduce in any manner the amount of, or
delay the timing of, any amounts received on Business Loans which are required
to be distributed on any Note Certificate without the consent of the Holder of
such Note or Certificate, or change the rights or obligations of any other party
hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the Servicer
and the Owner Trustee with the consent of the Indenture Trustee and the consent
of the Majority Noteholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders such amendment shall reduce
in any manner the amount of, or delay the timing of, any amounts which are
required to be distributed on any Note without the consent of the Holder of such
Note or reduce the percentage of Holders which are required to consent to any
such amendment without the consent of the Holders of 100% of the Notes and
Certificates affected thereby and, provided further, that no amendment affecting
only one or more Classes of Notes shall require the approval of holders of Notes
of the other Classes.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 11.03 Recordation of Agreement.
------------------------
58
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Noteholders' expense on direction of the Majority Noteholders,
but only when accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the Noteholders
or is necessary for the administration or servicing of the Business Loans.
Section 11.04 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated
as herein provided.
SECTION 11.05 GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 11.06 Notices.
-------
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Servicer and the Seller, First National Bank of New England, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, or
such other addresses as may hereafter be furnished to the Noteholders in writing
by the Seller and the Servicer, (ii) in the case of the Indenture Trustee,
Marine Midland Bank, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 12th Floor,
Attention: Corporate Trust Department, (iii) in the case of the Owner Trustee,
Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (iv) in the case of the Noteholders, as set forth in
the Note Register, (v) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
(vi) in the case of Duff & ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co., ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ABS Monitoring Group. Any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice by such party, except that notices to the
Noteholders shall be effective upon mailing or personal delivery.
Section 11.07 Severability of Provisions.
--------------------------
59
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 11.08 No Partnership.
--------------
Nothing herein contained shall be deemed or construed to create a co-
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor and not as agent for the
Noteholders.
Section 11.09 Counterparts.
------------
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 11.10 Successors and Assigns.
----------------------
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Servicer, the Indenture Trustee and the Noteholders and their
respective successors and assigns.
Section 11.11 Headings.
--------
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 11.12 Notification to Rating Agencies.
-------------------------------
The Indenture Trustee shall give prompt notice to the Rating Agencies
of the occurrence of any of the following events of which it has received
notice: (1) any modification or amendment to this Agreement, (2) any change of
the Indenture Trustee, the Servicer or Paying Agent, (3) any Event of Default,
and (4) the final payment of all the Notes. The Servicer shall promptly deliver
to the Rating Agencies a copy of each of the Servicer's Certificates. Further,
the Servicer shall give prompt notice to the Rating Agencies if the Servicer or
any of its affiliates acquire any Notes.
Section 11.13. Limitation of Liability.
-----------------------
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee on behalf of the Issuer
under the Trust Agreement, in the exercise of the
60
powers and authority conferred and vested in it, (b) each of the
representations, undertaking and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
of binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to the Agreement and by
any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
61
IN WITNESS WHEREOF, the Seller, the Servicer and the Trust have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
FIRST NATIONAL BANK OF NEW ENGLAND
as Seller and Servicer
By: ________________________________
Name:
Title:
FNBNE BUSINESS LOAN TRUST 1998-A,
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By: ________________________________
Name:
Title:
62
Accepted and Agreed to:
MARINE MIDLAND BANK, not in its individual
capacity, but solely as Indenture Trustee
By:_________________________________
Name:
Title:
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
On the 30th day of December, 1998 before me, a Notary Public in and
for said State, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ known to me to be an
officer of Wilmington Trust Company, the trust company that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said banking corporation, and acknowledged to me that such banking corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________
Notary Public
My Commission expires ___________
STATE OF __________ )
: ss.:
COUNTY OF ________ )
On the 30th day of December, 1998 before me, a Notary Public in and
for the State of ________, personally appeared ______________ known to me to be
the ________________________ of First National Bank of New England, one of the
corporations that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
My Commission expires ________
EXHIBIT A
CONTENTS OF BUSINESS FILE
With respect to each Business Loan, the Business File shall include a
copy of any of the following items delivered to the Indenture Trustee:
1. The original Business Note, endorsed by means of an allonge as
follows: "Pay to the order of Marine Midland Bank, and its
successors and assigns, as Indenture trustee under that certain
Indenture dated as of December 1, 1998, relating to FNBNE
Business Loan Trust 1998-A, without recourse" and signed, by
facsimile or manual signature, in the name of the Seller by a
Responsible Officer, with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to
the Seller, if the Seller was not the originator; provided,
--------
however, that in lieu of the original Business Note relating to
one Business Loan, where the original Business Note has been lost
the Seller may deliver a lost note affidavit and, if a copy
exists, a copy of the original Business Note;
2. With respect to those Business Loans secured by Mortgaged
Properties, either: (i) the original Mortgage, with evidence of
recording thereon, (ii) a copy of the Mortgage certified as a
true copy by a Responsible Officer of the Seller where the
original has been transmitted for recording until such time as
the original is returned by the public recording office or duly
licensed title or escrow officer or (iii) a copy of the Mortgage
certified by the public recording office in those instances where
the original recorded Mortgage has been lost;
3. With respect to those Business Loans secured by Mortgaged
Properties, either: (i) the original Assignment of Mortgage from
the Seller endorsed as follows: "Marine Midland Bank,
("Assignee") its successors and assigns, as Indenture Trustee
under the Indenture dated as of December 1, 1998 relating to
FNBNE Business Loan Trust 1998-A" with evidence of recording
thereon (provided, however, that where permitted under the laws
of the jurisdiction wherein the Mortgaged Property is located,
the Assignment of Mortgage may be
A-1
effected by one or more blanket assignments for Business Loans
secured by Mortgaged Properties located in the same county), or
(ii) a copy of such Assignment of Mortgage certified as a true
copy by a Responsible Officer of the Seller where the original
has been transmitted for recording (provided, however, that where
-------- -------
the original Assignment of Mortgage is not being delivered to the
Trustee, each such Responsible Officer may complete one or more
blanket certificates attaching copies of one or more Assignments
of Mortgage relating to the Mortgages originated by the Seller);
4. With respect to those Business Loans secured by Mortgaged
Properties, either: (i) originals of all intervening
assignments, if any, showing a complete chain of title from the
originator to the Seller, including warehousing assignments, with
evidence of recording thereon if such assignments were recorded,
(ii) copies of any assignments certified as true copies by a
Responsible Officer of the Seller where the originals have been
submitted for recording until such time as the originals are
returned by the public recording officer, or (iii) copies of any
assignments certified by the public recording office in any
instances where the original recorded assignments have been lost;
5. With respect to those Business Loans secured by Mortgaged
Properties, either: (i) originals of all title insurance
policies relating to the Mortgaged Properties to the extent the
Seller obtained such policies or (ii) copies of any title
insurance policies or other evidence of lien position, including
but not limited to PIRT policies, limited liability reports and
lot book reports, to the extent the Seller obtains such policies
or other evidence of lien position, certified as true by the
Seller;
6. With respect to these Business Loans secured by other items of
Collateral, the original or certified copy of all filed UCC
financing statements securing such Collateral naming the Seller
as "Secured Party;"
7. For all Business Loans, blanket assignment of all Collateral
securing the Business Loan, including
A-2
without limitation, all rights under applicable guarantees and
insurance policies;
8. For all Business Loans, irrevocable power of attorney of the
Seller to the Trustee to execute, deliver, file or record and
otherwise deal with the Collateral for the Business Loans in
accordance with the Agreement. The power of attorney will be
delegable by the Trustee to the Servicer and any successor
servicer and will permit the Trustee or its delegate to prepare,
execute and file or record UCC financing statements and notices
to insurers; and
9. For all Business Loans, blanket UCC-1 financing statements
identifying by type all Collateral for the Business Loans in the
Business Loan Pool and naming the Trustee as Secured Party and
the Seller as the Debtor. The UCC-1 financing statements will be
filed promptly following the Closing Date in New York and
Connecticut and will be in the nature of protective notice
filings rather than a true financing statement.
A-3
EXHIBIT B
[INTENTIONALLY OMITTED]
B-1
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To: Marine Midland Bank
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Depository")
As "Servicer" under the Sale and Servicing Agreement, dated as of
December 1, 1998, relating to the FNBNE Business Loan Notes, Series 1998-A (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Principal and Interest Account pursuant to Section 4.03 of the Agreement, to be
designated as "First National Bank of New England, as Servicer, in trust for the
registered holders of FNBNE Business Loan Notes, Series 1998-A." All deposits
in the account shall be subject to withdrawal therefrom by order signed by the
Servicer. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter
is submitted to you in duplicate. Please execute and return one original to us.
FIRST NATIONAL BANK OF NEW ENGLAND
By:_______________________________
Name:
Title:
C-1
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number _____________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the
account will be insured to the maximum amount provided by applicable law by the
Federal Deposit Insurance Corporation.
MARINE MIDLAND BANK
-------------------
(Name of Depository)
By:______________________________
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇
[▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇]
▇-▇
EXHIBIT E
[INTENTIONALLY OMITTED]
E-1
EXHIBIT F
FORM OF INITIAL CERTIFICATION
___________, 1998
[Seller]
[Servicer]
Re: Sale and Servicing Agreement FNBNE Business
Notes, Series 1998-A, dated as of
December 1, 1998 between FNBNE Business
Loan Trust 1998-A,and First National Bank
of New England,as Seller and Servicer
-------------------------------------
Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement (the "Agreement"), the undersigned, as Indenture Trustee,
hereby certifies that, except as noted on the attachment hereto, if any (the
"Loan Exception Report"), it has received for each Business Loan, a Business
Note and a Business File and does declare that the Indenture Trustee will hold
such documents and any amendments, replacements or supplements thereto, for the
benefit of the Noteholders and the Certificateholders. The documents contained
therein appear to bear original signatures. Capitalized but undefined terms
have the meanings set forth in the Sale and Servicing Agreement.
The Indenture Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement.
F-1
The Indenture Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Business Loans identified on the Business Loan Schedule,
or (ii) the collectibility, insurability, effectiveness or suitability of any
such Business Loan.
MARINE MIDLAND BANK,
as Indenture Trustee
By:______________________________
Name: ▇▇▇▇▇ Barstock
Title: Assistant Vice President
F-2
EXHIBIT F-1
FORM OF INTERIM CERTIFICATION
_________, 1998
[Servicer]
[Seller]
Re: Sale and Servicing Agreement
FNBNE Business Loan Notes, Series 1998-A, dated as of December 1,
1998 between FNBNE Business Loan Trust 1998-A and First National
Bank of New England, as Seller and Servicer
----------------------------------------------------------------
Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement (the "Agreement"), the undersigned, as Indenture Trustee,
hereby certifies that, except as noted on the attachment hereto, if any (the
"Loan Report"), it has received each of the documents required to be delivered
to it pursuant to Section 2.04 of the Agreement with respect to each [Initial]
[Subsequent] Business Loan listed in the Business Schedules and the documents
contained therein appear to bear original signatures.
The Indenture Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement.
F-1-1
The Indenture Trustee makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents or any
of the Business Loans identified on the Business Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Business
Loan.
MARINE MIDLAND BANK,
as Indenture Trustee
By:______________________________
Name: ▇▇▇▇▇ Barstock
Title: Assistant Vice President
F-1-2
EXHIBIT F-2
FORM OF FINAL CERTIFICATION
[date]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement dated as of
December 1, 1998 between FNBNE Business Loan Trust 1998-A and
First National Bank of New England, as Seller and Servicer,
relating to FNBNE Business Loan, Series 1998-A
-------------------------------------------------------------
Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement, the undersigned, as Indenture Trustee, hereby certifies
that, except as noted on the attachment hereto, as to each Business Loan listed
in the Business Loan Schedule (other than any Business Loan paid in full or
listed on the attachment hereto) it has reviewed the documents delivered to it
pursuant to Section 2.04 of the Sale and Servicing Agreement and has determined
that (i) all such documents are in its possession, (ii) such documents have been
reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Business Loan and (iii) based on its
examination, and only as to the foregoing documents, the information set forth
in the Business Loan Schedule respecting such Business Loan is correct.
MARINE MIDLAND BANK,
as Indenture Trustee
By:______________________________
Name: ▇▇▇▇▇ Barstock
Title: Assistant Vice President
F-2-1
EXHIBIT G
[INTENTIONALLY OMITTED]
G-1
EXHIBIT H
BUSINESS LOAN SCHEDULE
H-1
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: Marine Midland Bank
Corporate Trust Administration
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Sale and Servicing Agreement relating to FNBNE Business Loan
Notes, Series 1998-A, dated as of December 1, 1998
----------------
In connection with the administration of the pool of Business Loans
held by you, we request the release, and acknowledge receipt, of the (Trustee's
Business File/[specify document]) for the Business Loan described below, for the
reason indicated.
Obligor's Name, Address & Zip Code:
----------------------------------
Business Loan Number:
--------------------
Reason for Requesting Documents (check one)
-------------------------------
____ 1. Business Loan Paid in Full
(Servicer hereby certifies that all amounts
received in connection therewith have been credited to the
Principal and Interest Account and remitted to the Trustee for
deposit into the Note Distribution Account pursuant to the Sale
and Servicing Agreement.)
____ 2. Business Loan Liquidated
(Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been finally
received and credited to the Principal and Interest Account and
remitted to the Indenture Trustee for deposit into the Note
Distribution Account pursuant to the Sale and Servicing
Agreement.)
____ 3. Business Loan in Foreclosure
_____4. Business Loan Repurchased Pursuant to Section 10.01
of the Sale and Servicing Agreement.
I-1
_____5. Business Loan Repurchased or Substituted Pursuant to Article II or III
of the Sale and Servicing Agreement (Servicer hereby certifies that
the repurchase price or Substitution Adjustment has been credited to
the Principal and Interest Account and/or remitted to the Indenture
Trustee for deposit into the Note Distribution Account pursuant to the
Sale and Servicing Agreement.)
____ 6. Collateral Being Released Pursuant to Section 6.02(f) of the Sale and
Servicing Agreement.
____ 7. Other (explain) ____________________________
_________________________________
If box 1 or 2 above is checked, and if all or part of the Indenture
Trustee's Business File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Business Loan.
If box 3, 4, 5, 6 or 7 above is checked, upon our return of all of the
above documents to you, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
FIRST NATIONAL BANK OF NEW ENGLAND,
As Servicer
By:____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Date:
Documents returned to Indenture Trustee:
Marine Midland Bank
--------------------
Indenture Trustee
By: ▇▇▇▇▇ Barstock
Date:
I-2
EXHIBIT J
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds _________
Insurance Proceeds ________
Other (Itemize) ________
2. Servicing Advances $________
Monthly Advances ________
Total Advances $________
3. Net Liquidation Proceeds $________
(Line 1 minus Line 2)
4. Principal Balance of the Business
Loan on date of liquidation $________
5. Realized (Loss) or Gain $________
(Line 3 minus Line 4)
J-1
EXHIBIT K
FORM OF DELINQUENCY REPORT
DELINQUENCY, REO PROPERTY AND FORECLOSURE INFORMATION
Total
Ranges Total Gross Unguaranteed
Series (in days) Acct Loan Amount Interest Amount Ungtd Pct
----------------------------------------------------------------------------------------------
1 to 29 Days
30 to 59 Days
60 to 89 Days
90 to 179 Days
180 to 719 Days
720 and Over
Foreclosure
REO Property
Total Delinquency
Outstanding by Category
K-1
EXHIBIT L
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Indenture Trustee pursuant to
Section 5.09 shall contain the following information for each Business Loan as
of the related Record Date:
1. Name of the Obligor, address of the Mortgaged Property, if
applicable, and Account Number.
2. The Business Loan Interest Rate.
3. The Monthly Payment.
4. The dates on which the payments were received for the applicable
Due Period and the amount of such payments segregated into the
following categories; (a) total interest received (including
Servicing Fee); (b) principal received; (c) Curtailments received;
and (d) Principal Prepayments received.
5. The Business Loan principal balance at the beginning and end of the
period.
6. The original disbursement date and current maturity date.
7. A "Delinquency Flag" noting that the Business Loan is current or
delinquent. If delinquent, state the date on which the last
payment was received.
8. For any Business Loan that is not either 24 months delinquent or
otherwise determined to be uncollectible, a "Foreclosure Flag"
noting that the Business Loan is the subject of foreclosure
proceedings.
9. For any Business Loan that is not either 24 months delinquent or
otherwise determined to be uncollectible, an "REO Flag" noting that
the Mortgaged Property is an REO Property.
L-1
10. A "Liquidated Business Loan Flag" noting that the Business Loan is
a Liquidated Business Loan and the Net Liquidation Proceeds
received in connection therewith.
11. Any additional information reasonably requested by the Indenture
Trustee.
L-2